American Gangster’s Wad of Euros Signals U.S. Decline
`It may be our currency, but it’s your problem” was Treasury Secretary John Connally’s taunt when the U.S. unhooked the dollar from the gold standard in 1971, unilaterally rewriting the rules of world business in America’s favor.
Now the world is taunting back. Almost four decades after the U.S. tore up the monetary arrangements that governed the post-World War II international economy, the dollar’s fall from grace amounts to a tectonic shift in the global hierarchy. This time, the U.S. currency is on the losing side.
After declining in five of the last six years, the weakest dollar in the era of floating currencies reflects a period of diminished U.S. political and economic hegemony. Whoever wins the White House next year will confront two unpopular choices: Accept the fall in U.S. clout and the rise of new rivals, or rein in record public and consumer debt that the rest of the world no longer wants to bankroll.
“What we’re seeing is a very broad rebalancing of economic and political power in the world,” says Jeffrey Garten, a Yale School of Business professor who was the Commerce Department’s undersecretary for international trade in the Clinton administration. “The scales are moving, and they’re moving quite fast.”
The dollar blues have migrated from the halls of central banks to images of rap musicians.
In a video for the movie “American Gangster,” hip-hop maestro Jay-Z thumbs through a wad of 500-euro notes on a night of cruising through the concrete canyons of New York, a city where the euro isn’t legal tender. The euro gained against the dollar today as European economic growth in the third quarter accelerated more than forecast. ……….
