If Americans have to learn the hard way that they cannot surf the wave of the world's savings forever, it will be a painful but beneficial lesson. If Asians learn that they cannot avoid risk by placing their savings in
Currencies rise and fall over time because countries really do get richer and poorer. Dig something valuable up from under the ground, or devise products or services that people value, and your money will be worth more. Let your industries fall behind, or allow inflation to debase the value of your money, and its global standing will decline.
The puzzle is that there's no real evidence that the economic prospects of
Why haven't these countries' currencies been gaining on the dollar? Because their governments won't let them.
That's what the
This is an arrangement that can't go on forever. It should unravel; that's the way of economic change and progress. But there's no plan in place to make it happen in an orderly fashion. The fear that the ensuing adjustment might be even more chaotic than in the 1970s probably explains most of the dollar's recent decline. It's not that we Americans have gotten a lot poorer. It's that we might be about to.