Reg Little gets very close to the truth.

The position of the American Dollar as the currency of world trade, and as the principal reserve currency, made sense while the USA had a positive trade balance from the end of WW2 until the end of the sixties. Once the USA became a significant debtor nation the USA political system has been corrupted as the government and business struggled to maintain the USA's no longer warranted prime position.

In my view Keynes saw this likely problem when he sought to have future international trade in real goods and services denominated in a separate currency, the Bancor. That proposal had its own built in future problem. Even starting such a system with a disproportional share of the new currency going to the debtor nations, the most successful creditor nations would eventually corner most of that currency.I doubt if even tying a Bancor to a basket of currencies would solve that problem.

International trade is always exactly balanced; the total accumulated wealth of the successful trading nations equals the accumulated debts of the unsuccessful.

Ultimately sovereign currencies have to fluctuate in relative values and some international debts have to be forgiven.

After all, a significant proportion of trade is carried out to solve problems associated domestic underemployment of either people and capital equipment, or both and particularly with manufactured goods.

As David Hume said, and as Smith repeated, money is not a valid item of trade it is the lubricant, that, in modern terms, should stop the wheels falling off.

some valid points.

for past few centuries it has been the UK (18th and 19thC) and then the US which has played the important stablising role in terms of currency.

But while you bag the predicement of the US, ask yourself who would the world trust to the be the new US; it may be China as it wins support from other countries, but i for one have a problem with greater leadership from a far less transparent and more corrupt authoritarian nation.

I see problems ahead, dont you Reg?

It's about time Australian thinkers and commentators took heed of the excellent criticism of the USA by it's leading philosophers and critics. It isn't only the financial shenanigans we should be very concerned about, but also human rights, freedom of speech and thought and government accountability.
Chris Lewis you are deluding yourself if you think the USA is one whit better than any other state. As Paul Craig Roberts pointed out in an excellent article "You are the Hope" in ICH on 4th May:- "...the First Black President, the first member of the oppressed class to sit in the Oval Office, validates the Bush Regime’s assertion of the right of the unaccountable executive to ignore habeas corpus and due process. Not satisfied with this crime, Obama asserted the right of the executive branch to murder any citizen suspected, without proof being offered to a court, of undefined “support of terrorism.” Today all Americans have fewer rights than blacks had prior to the Civil Rights Act. Anything, including a column critical of war and the police state, can be declared to be “in support of terrorism.” As the tyrant Bush put it: “You are with us, or you are against us.” The print and TV media and many Internet sites got the message: Serve Washington’s agenda, and will you will prosper. Advertisers and the CIA will pump money into your coffers. Challenge us and you will be demonized and could face a military tribunal, indefinite detention, or assassination. Bradley Manning and Julian Assange are being persecuted for telling the truth."
The article continues with dreadful examples of state corruption and intimidation. Like so many critics, Roberts isn't an ignorant loudmouth, he was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available

so you are saying China will provide better internaitonal leadership?

Please explain why?

no doubt the more the Christian Judeo ethics are trashed the more corrupt a nation becomes. Can't keep a marriage vowel you are far more likely not to keep your word as a pollie. Moral relativsism has equalled decay and corruption. We have seen this in Aussie.

Very interesting article on a conservative perspective of the state of the American nation.

"...a world where Anglo-American exceptionalism could become a troubled memory."

Of course it could, but what is the probability that development will actually occur?

All this seems very familiar. The one reliable characteristic of economic and political forecasts is that they're usually wrong, so I 'd recommend some caution in regard to the rise of Asia and the decline of the US. Twenty years ago Japan was the star performer and I can remember attending economic seminars with the "Japan as Number One" theme---the rest is history.

Confucianism was also presented at the time as the factor that animated South Korean and Japanese development. The fact is that no culture has been able to reach industrial maturity without introducing liberal democratic reforms to some extent, regardless of its cultural traditions. Can the Chinese Communist Party manage that process and manage Chinese society at the same time?

I'd a agree with Chris Lewis, America, despite its flaws, particularly its bellicose foreign policy, still possess enormous intellectual, institutional and material resources, so discounting a Niall Ferguson style "Precipitate Imperial Collapse", I'd put all my money on the USA to maintain its position into the long term, and it's the "least bad" of any potential hegemons

Australians are always looking for a "Great and Powerful Friend", there aren't any, just trading partners.

The only thing that gives me hope from the USA are the few people fighting for the remenants of their Constitution which Bush and Obama have trashed.

As far as the Patriot Act,Preventative Dentention, legalised assassination of suspected terrorists and Obama's latest NDAA which gives their military to power to arrest and detain without legal council anyone in the West,we are looking at the raw face of fascism once again.

The popular media is self censoring but our alternate internet media still have some courage and yearning for freedom.

No, Chris Lewis, clearly I was saying no such thing. The world does not need one country to be judge jury and executioner of all other countries - especially one that is a social and financial disaster, propped up fear of bombs, torture and incarceration. However, I am saying that the USA has lost all credibility as a 'land of the free', a 'democracy', an 'upholder of human rights', or a land that treats its own citizens with respect. If you read news and opinion from sites such as ICH and the blogs and writings from which those items are extracted, instead of media censored and selected by mainstream media barons, then you will learn that the USA is none of the above. It has become a quasi police state by undermining the constitution. Worse, they maintain they have the right to torture, maim, kill and bomb anyone anywhere on the planet, including their own citizens, who is deemed a potential threat to the 'interests' of the USA. Assassination squads are not new, the USA 'pacified' the Philippines after they invaded, killing hundreds of thousands through savagery and torture, then established a sophisticated surveillance and control system, using the most advanced technology of the day to ensure obedience. Their secret wars in Laos sicken decent people. Drone strikes in villages in Yemen, Pakistan and elsewhere terrorise and turn people into enemies of the United States and Australia [because we are their obedient serfs]. Obama's global assassination program is designed to induce maximum terror, beside which the puny efforts of religious fundies are insignificant.
The USA only maintains its global hegemony through fear, and forcing the use of their dollar in all oil and other trading. Libya was destroyed because they opted out; Australia will fare no better if we annoy them, There are petitions circulating Washington to annex Australia, as they did to Hawaii not that long ago

I have been raising the alarm about the imperial U.S. and advocating the reading of ICH for months.

Finally, someone has come up with an article, and it's our Reg!

The U.S. is morally bankrupt and may get to be financially bankrupt soon. The sooner the better.

The U.S. is no longer a world leader. It is an imperial pariah.

Australia must wake up. The U.S. is no longer the answer.

And neither is Israel!

Well done Reg. ...and the band played on, Australia followed, through war, economic policy and entertainment.
Tell me Chris Lewis why do you need a world leader? Without one the UN might be a little less disfunctional. Indeed, why not reform and strengthen the UN thus allowing it to function as intended ?

Bruce Haigh

Good question, Bruce Haigh.

Bruce, are you serious?

There are always nations, with certain ideas and leadership qualities, that are deemed more worthy of importance in a world of competitive naitons struggling for resources and the influence of certain ideas. It is called reality.

I merely look to the ones most capable of promoting certain ideas in line with Western principles.

I argue it is wrong to imply all naitons are equal in terms of leadership abilities. They are not.

A world where Western principles are diminished is not the world i am looking forward too.

If China's rise can be tempered in line what most countries will want, then i see no problem. But i have little faith in corrupt and authoritarian states, although i am hoping the Chinese people do force change.

As for the UN, it does have importance.

However, in reality, if the dominant powers dont agree they will give it little credence. We are light years away from a fuly democrat UN, and i dont expect to see it my lifetime.

It is powerful nations that determine the direction of internaitonal relations, albeit they may want to first use the UN as a forum in order not to alienate world opinion.

"We are light years away from a fuly democrat UN, and i dont expect to see it my lifetime."

Yes, indeed, especially in the Security Council--three faded imperial powers clinging to the remnants of great power status, authoritarian China and the US, reform will be a very long time coming. Perhaps the rest of the members should create a real UN.

The four main victors of WW2 designed the UN to be their creature and invited France to join the exclusive club presumably on the basis of "better inside the tent". Because of the permanent members' vetoes the UN has never functioned as a collective security organisation and never will, if it ever did it's first target would be the US. The UN is actually functioning as it was originally intended, that's the tragedy.

As Gore Vidal stated:

"The genius of our ruling class is that it has kept a majority of the people from ever questioning the inequity of a system where most people drudge along, paying heavy taxes for which they get nothing in return.

…fifty years ago, Harry Truman replaced the old republic with a national-security state whose sole purpose is to wage perpetual wars, hot, cold, and tepid. Exact date of replacement? February 27, 1947. Place: The White House Cabinet Room. Cast: Truman, Undersecretary of State Dean Acheson, a handful of congressional leaders. Republican senator Arthur Vandenberg told Truman that he could have his militarized economy only IF he first “scared the hell out of the American people” that the Russians were coming. Truman obliged. The perpetual war began. Representative government of, by, and for the people is now a faded memory. Only corporate America enjoys representation by the Congress and presidents that it pays for in an arrangement where no one is entirely accountable because those who have bought the government also own the media. Now, with the revolt of the Praetorian Guard at the Pentagon, we are entering a new and dangerous phase. Although we regularly stigmatize other societies as rogue states, we ourselves have become the largest rogue state of all. We honor no treaties. We spurn international courts. We strike unilaterally wherever we choose. We give orders to the United Nations but do not pay our dues…we bomb, invade, subvert other states. Although We the People of the United States are the sole source of legitimate authority in this land, we are no longer represented in Congress Assembled. Our Congress has been hijacked by corporate America and its enforcer, the imperial military machine…

We should stop going around babbling about how we’re the greatest democracy on earth, when we’re not even a democracy. We are a sort of militarised republic."

How true is that?