World Bank President Sees Dollar’s Status Diminishing | Economy | theTrumpet.com by the Philadelphia Church of God

« World Bank President Robert Zoellick speaks on the global economic crisis at the Johns Hopkins University Paul H. Nitze School of Advanced International Studies September 28 in Washington, D.C.
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World Bank President Sees Dollar’s Status Diminishing

October 5, 2009 | From theTrumpet.com

The United States should expect the dollar’s status as the world’s primary reserve currency to diminish, according to World Bank President Robert Zoellick. He said that as the roles of the euro and Chinese renminbi continue to expand, the dollar will continue to lose its position as the favored world currency.

“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” Zoellick said on September 28 in a speech at the School for Advanced International Studies at Johns Hopkins University.

Mr. Zoellick said that while the dollar will likely remain a major currency, there will increasingly be other options.

“There is every reason to believe,” he said, “that the euro’s acceptability could grow. The influence of the euro will depend in part upon the competitiveness of European Union countries in future years …. But Euro financing offers a respectable alternative if the dollar is weak.

“Moreover, China is moving toward gradual internationalization of its currency. China is making it easier for trading partners to do business in renminbi—for example, through currency swaps.”

Beijing issued sovereign bonds in renminbi to offshore investors for the first time this month.

In another step toward expanding the role of the renminbi, Chinese officials recently announced that foreign companies are now allowed to list their stocks in China.

As the world removes its confidence from the American economy and invests it in other economies, the American economy will be upended. The U.S. is facing an economic calamity far worse than the stock market crash of 1929; the scale of this financial crisis will be unprecedented.

Mr. Zoellick can see the colossal shift looming on the horizon. “The one thing we can be sure about,” he said in his speech, “is that another upheaval will happen in your lifetimes.”

In a globally interconnected economic system, a collapse of the dollar would have massive ramifications around the world—including in Europe. The European economy, however, will be in a position to ultimately take advantage of America’s downfall and fill the vacuum left in its absence—the vacuum already emerging.

The spillover effects of an American economic crisis may well trigger the full unification of Europe under one strong leader—a scenario Herbert W. Armstrong spoke of for decades.

For more about the shift in global confidence away from America and toward Europe, read “New Global Trend: Dump a Dollar, Buy a Euro.” •

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In answer to the 2nd comment about the effect on Australia. China hold devaluing US dollar debt, which it can liquidate slowly and convert into raw materials from Australia, which naturally has blind faith in the US dollar (mainly through friendship with the US). China will dump US money in Australia, to mine materials which are more valuable and cannot be devalued. Sometimes gold can be in the forms of Uranium, Coal, Gas, Rare Metals, Iron and so on. Australia may be left “holding the bag.” South Pacific nations such as Fiji may need to be concerned about their big neighbours Australia and possibly New Zealand. But I don’t think anything will stop it now. The US has been found in the balance and Australia will be further down the line. The Bible spells it all out.

Cameron Madden—Queensland Australia

The Dollar will lose clout in relative terms but that is not neccesarily bad. In the past America thrived while the rest of the world essentially starved. Now the rest of the world is catching up. Only 8 years ago, the average Australian’s income was half that of the average American, now Australians are slightly better off than Americans. In many countries people are learning to feed themselves and become productive. If anything more prosperous nations will create a more harmonious world order. A world where only a few prosper and the rest starve which occurred during the Pax Americana where Western Europe, Japan, and the US dominated is the best example. While you predict a German dominated EU becoming a world military power, I differ, I lived in that nation and it cannot be a power like America, the EU has influence but is made up of too many different countries and differing points of view to become a single entity. It will never happen, that being said the US will face signifcant rivals in this century. I see those rivals being major emerging nations such as China, Russia, India, and Brazil. Once again this is not necessarily bad once the mostly starving masses of these nations prosper I see less enmity among nations. God creates abundance if we believe in him.

Mike—Australia

I have been following your work and warnings at least several times a week mainly because of the accuracy of your predictions which were based on the Bible. The dollar collapse is something that is a long time coming given the over-consumption of resources and lack of concern for the future. How would the impact of a dollar collapse affect our neighbours Australia and New Zealand? Some say that Australia will be less affected because of its proximity to Asia economically. Has anyone done any studies to ascertain this? Thank you.

Peter Jacob—Fiji