The enormity of the global black economy is the main reason why the US. dollar still hangs in there.
A ProutWorld Commentary
(PNA/ProutWorld, Dec. 20, 2004) - Finance, like stable marriages, is based on trust. As soon as that trust is gone the stability of financial relationships is threatened.
In the world of global finance the U.S. dollar has since long enjoyed being trusted as the universal standard and sine qua non of world finance and economy. In the same way as the 19th century belonged to the U.K. and her British Pound, the 20th century has followed the U.S. and her dollar, all the way from Bretton Woods to the WTO. But all things, both good and bad, come to an end.
Current account figures – which measure trade in goods and services, investment returns and one-way financial transfers – released by the Bureau of Economic Analysis now shows that the U.S. trade deficit continues to grow even as the dollar falls against the Euro and other major currencies (see report).
The dollar's sharp fall surprises no watcher or analysist; for decades they have announced the fall of the American economy itself. But their accurate analyses and predictions have been delayed by great political and other unforseen events. The fall of communism, the efficient spread of Northern trade into the poor South, and a protracted conflict with Islam has provided the Western capitalist world with the oxygen it needed so badly in order to somehow maintain its imbalanced economy and indeed global exploitation.
But why has the U.S. dollar managed to hang in there for so long? After all, it’s now decades since President Ronald Reagan ran his ship from being the world’s largest creditor into being its largest debtor, and it has stayed like that ever since.
A lot of the global trust required to achieve that fantastic feat may simply have to do with the black money factor. It is estimated that out of the total amount of physical green dollar bills, more than two thirds of it is circulating outside of the United States. And where would it be "found"? In the vaults, walls and deep, deep pockets of the runners of the world’s black economy.
This may seem like a trifle matter to some whereas a closer look will reveal its enormous importance, not only to very poor economies of the South, but to the world’s largest economies – China, India, Russia and of course the U.S. herself.
Estimates on the world’s black economies vary naturally. Some opine that India – "the world’s largest democracy" – is almost completely run "in the black" and that 80 per cent and upwards of her socio-economic and political life are driven by illegal finance. As far as the U.S. is concerned, estimates vary from 20 to 30 per cent, in a country where black money means mostly drug money – very much drug money.
The global view of the U.S. dollar as the most trusted black currency will soon change fundamentally. Already the Euro is more valued in large black markets, reports inform us. The collapse of the dollar in the black markets will probably be the final spike in the coffin; the U.S. will lose its largly conceptual hold on the global economy and her government will have to think anew about what it should do next. We sincerely hope that wars will not constitute a major aspect of that strategic planning manoeuvring "up on the hill".
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