Dollar could plausibly lose its global dominance

Subject Questions over the future of the international monetary system. Significance The topic of primacy in the international monetary system is slippery, because the international monetary system in an era of nation-state central banks dates only from the late 19th century. There have been few changes in dominant-currency status in that time, making it difficult to be definitive about why currencies gain and relinquish top-currency status. Nevertheless, the advent of a heterodox US administration necessitates unorthodox thinking -- and the US currency is one place the new president could make his mark. Impacts Numeraire-currency status is a double-edged sword; its loss would not be unambiguously bad for the US economy. The value of the dollar has been supported by numeraire status, arguably to the detriment of US trade. The danger in this scenario is in achieving a smooth transition to a new numeraire currency.

2019 ◽  
Vol 2 (1) ◽  
pp. 98-107
Author(s):  
Haiping Qiu ◽  
Min Zhao

Purpose The world currency is endowed with two inherent contradictions, namely, the general contradiction of all currencies and the special contradiction between the quality and quantity of the world currency. The paper aims to discuss these issues. Design/methodology/approach In the wake of the Second World War, the USA, with its strong economic and military strength, established an international monetary system centered on the US dollar (USD). This gave USD the status of “world currency” and bounded it to the US imperialist hegemony with mutual integration and interaction, making it possible for USD capital to conduct international exploitation and wealth plundering extensively around the world. Findings The contradiction between the capital logic and the power logic, which is inherent in capital accumulation models of the new imperialism, also indicates the inevitable decline of USD. Originality/value This constitutes an important feature of the new imperialism. However, as a sovereign currency, USD has inextricable and inherent contradictions while exercising its function as the world currency.


2020 ◽  
Vol 16 (6) ◽  
pp. 767-783 ◽  
Author(s):  
Steffen Murau ◽  
Joe Rini ◽  
Armin Haas

AbstractLittle has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.


2016 ◽  
Vol 32 (9) ◽  
pp. 32-35
Author(s):  
Mark Thomas

Purpose The purpose of this paper is to analyze Lenovo’s successful acquisition of IBM’s PC division using Ghemawat’s (2001) CAGE framework. It was an acquisition that was so full of symbols that it is difficult to know where to begin. Lenovo’s purchase of IBM in 2005 was first seen as a sign of the rapid growth and expansion of the Chinese economy and its transformation away from the traditional manufacturing base to more high-tech areas. For doomsday merchants in the land of Uncle Sam, it foretold the end of the world domination of the US economy. Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers. Design/methodology/approach This paper is a case study. Findings Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers. Indeed, by 2014, the firm had enough confidence to add the IBM server business to its portfolio. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zahid Irshad Younas ◽  
Mahvesh Khan ◽  
Mamdouh Abdulaziz Saleh Al-Faryan

Purpose The purpose of the study is to explore the misconception that in developed countries, macroeconomic performance lead to sustainable firms or improves stakeholder well-being. The results may be the opposite or even worse. Design/methodology/approach This study examined this misconception using balanced panel data from 1,122 firms from different sectors of the US economy and data on macroeconomic performance from the World Bank. Findings The results of the one-step generalised method of moments indicate that most macroeconomic performance indicators had significant and negative impacts on firm sustainability and stakeholder well-being. Practical implications From a societal perspective, the results illustrate that the fruits of macroeconomic performance of the US economy do not reach stakeholders through firms’ sustainability. Thus, linking the economy’s macroeconomic performance with firm sustainability is vital for sustainably uplifting society and for stakeholder well-being. Originality/value From a policy perspective, this study reveals that the greater focus on macroeconomic performance in the USA over the past decades has resulted in lower firm sustainability because of the malfunctioning of social, economic, environmental and governance factors. This has negatively influenced stakeholder well-being in the country.


2020 ◽  
Vol 47 (3) ◽  
pp. 561-595
Author(s):  
Konstantinos N. Konstantakis ◽  
Panayotis G. Michaelides ◽  
Theofanis Papageorgiou ◽  
Theodoros Daglis

PurposeThis research paper uses a novel methodological approach to investigate the spillover effects among the key sectors of the US economy.Design/methodology/approachThe paper links the US sectors via a node theoretic scheme based on a general equilibrium framework, whereas it estimates the general equilibrium equation as a Global Vector Autoregressive process, taking into consideration the potential existence of dominant units.FindingsBased on our findings, the dominant sector in the US economy, for the period 1992–2015, is the sector of information technology, finance and communications, a fact that gives credence to the view that the US economy is a service-driven economy. In addition, the US economy seems to benefit by the increased labour mobility across knowledge-intensive sectors, thus avoiding the ‘employment trap’ which in turn enabled the US economy to overcome the financial crisis of 2007.Originality/valueFirstly, the paper models by means of a network approach which is based on a general equilibrium framework, the linkages between the US sectors while treating the sector of information, technology, communications and finance as dominant, as dictated by its degree of centrality in the network structure. Secondly, the paper offers a robustness analysis regarding both the existence and the identification of dominant sectors (nodes) in the US economy. Thirdly, the paper studies a wide period, namely 1992–2015, fully capturing the recent global recession, while acknowledging the impact of the global crisis through the introduction of the relevant exogenous dummy variables; Lastly and most importantly, it is the first study to apply the GVAR approach in a network general equilibrium framework at the sectoral level.


Author(s):  
Donna M. Kabalen de Bichara

Hundreds of 19th-century newspapers and magazines published in the region of the US–Mexico border are housed in archival collections in Mexico and the United States, and they provide access to historical, cultural, and ideological perspectives involving two world spheres that are intimately connected. Archival collections in the following databases provide access to periodicals published in the United States as well as in Mexico: the Newspaper and Periodicals Collection at the National Autonomous University of Mexico; the Readex Collection of Hispanic American Newspapers, 1808–1980; the Nettie Lee Benson Library’s microfilmed collection of 19th-century independent newspapers; the digital collection of periodicals and magazines from the Capilla Alfonsina Biblioteca Universitaria and the Biblioteca Universitaria Raúl Rangel Frias, at the Universidad Autónoma de Nuevo León; and the EBSCO Arte Público Hispanic Historical Collections, Series 1 and 2. These collections house digitized and microfilmed newspapers that include those published in the US states of California, Arizona, Nevada, New Mexico, and Texas, as well as Mexican states such as Baja California, Sonora, Chihuahua, Coahuila, Nuevo León, and Tamaulipas. The region includes areas that share not only a physical border but also a cultural memory based on the effects of historical collisions that have contributed to the formation of new meanings regarding these world spheres that can be understood as two intersecting semiotic systems that exist as a continuum. The intersection of these spaces represents the transnational aspect of periodical print culture of the late 19th century that communicates worldviews that are semiotically and ideologically heterogeneous. Indeed, cultural spaces that exist in the borderland (or that symbolic space that forms a border or frontier in a cultural sense), are semiotic realities that unfold in unpredictable and indeterminate ways as a result of historical processes. Periodical print culture produced in the border region provides access to diverse social, cultural, political, and religious perspectives. Furthermore, the history of print culture involves a process of communication of both social and cultural history. As objects of study, borderland newspapers ultimately provide the basis for understanding the circulation of ideas.


Significance In the worst start to a year for US equities since 2008, the benchmark S&P 500 index fell 0.7% during the week ending January 10. December's employment report showed US non-farm payrolls rising by a robust 252,000, but average hourly earnings declined, accentuating deflationary fears. The dollar continued to strengthen against the euro on concerns about a possible euro crisis over Greece and the introduction of sovereign QE by the ECB. With the US Federal Reserve preparing to raise rates, investor sentiment remains fragile. Impacts The tug-of-war between central bank largesse and country-specific, geopolitical and economic risks will become more intense. Markets will focus on renewed fears of 'Grexit' and on concerns about German opposition to an ECB sovereign QE programme. The relentless oil prices slide, exacerbated by the dollar's strength, will put further strain on EM assets. The ruble is likely to weaken further, increasing the scope for contagion to other developing economies.


Subject Exposure to US final demand. Significance The Commerce Department reported on March 7 that the US goods trade deficit widened to 69.7 billion dollars in January after a five-year high of 4% of GDP last year. The new administration has threatened to build a wall along the Mexican border, impose punitive tariffs on countries it runs a goods deficit with and label China a currency manipulator. Other countries also rely on US demand -- through goods and services trade, investment and remittances. Impacts In the unlikely event that Trump follows through on all his most extreme trade threats, the world could plunge into recession. Evidence does not support the new administration's view that free trade has damaged the US economy and the fortunes of its workforce. The WTO is reviewing several cases the previous US administration began against China -- extreme escalation could trigger US WTO withdrawal. Germany is the only G7 country that the United States runs both a goods and services trade deficit with, placing it in the firing line.


Significance One of the conundrums of the US economy that will influence the Federal Reserve's timing of an interest rate rise (currently projected for September) is where the savings from low energy prices have gone. Oil prices have dropped sharply since September 2014, from 97 dollars per barrel for West Texas Intermediate in June 2014 to 60 dollars per barrel today. Yet US personal consumption expenditures (PCE) only grew by 2.7%, well below the rate of growth of personal income, 4.1%. Impacts Greater spending on petrol will help the Highway Trust Fund slightly, but not before a new funding package is due by July 31. Low oil prices will outweigh consumer savings in such producing states as Texas and North Dakota. Greater consumer spending will adversely affect the US trade balance, as imports will rise due to the strong dollar.


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