The end of hegemony
Sábado, Febrero 2nd, 2008
During centuries mankind has had different ways of payment to do commercial transactions.At the beginning, species exchange, which was called barter. Some years later, value was added to the metal, with which they were able to buy or sell goods and services and it was called currency.
During many centuries this kind of exchange has remained and even if the foreign currencies that have handled the world trade have changed, actually Dollar is the one that has more force in buying and selling goods among different world countries.
The collapse of the European principal countries during the Second World War gave the United States the opportunity to become a world power and to made dollar become the reference currency. As in past times, when dollar was the one to give support to issue currency, today Dollar is the one that offers these conditions.
Even though dollar has not the same hegemony today as it used to have in the ’50s when Bretton Woods was established. Reconstruction of countries that were destroyed during the Second World War and Euro appearance during the 90’s give an scene not very favorable for an american economy with deficit balance of trade and with an important weapon carreer.
During the 90’s the difference between american exports and imports was around 12%, since 1999 the raising imports rate raises until 27%, this made the dollar reduce its value until reaching in 2004 24%.
This deficit in the balance of trade shows that United States finance others economies. The question is how long will the United States tolerate this rate and what will happen if the dollar continues to reduce its value?
During centuries mankind has had different ways of payment to do commercial transactions.At the beginning, species exchange, which was called barter. Some years later, value was added to the metal, with which they were able to buy or sell goods and services and it was called currency.
During many centuries this kind of exchange has remained and even if the foreign currencies that have handled the world trade have changed, actually Dollar is the one that has more force in buying and selling goods among different world countries.
The collapse of the European principal countries during the Second World War gave the United States the opportunity to become a world power and to made dollar become the reference currency. As in past times, when dollar was the one to give support to issue currency, today Dollar is the one that offers these conditions.
Even though dollar has not the same hegemony today as it used to have in the ’50s when Bretton Woods was established. Reconstruction of countries that were destroyed during the Second World War and Euro appearance during the 90’s give an scene not very favorable for an american economy with deficit balance of trade and with an important weapon carreer.
During the 90’s the difference between american exports and imports was around 12%, since 1999 the raising imports rate raises until 27%, this made the dollar reduce its value until reaching in 2004 24%.
This deficit in the balance of trade shows that United States finance others economies. The question is how long will the United States tolerate this rate and what will happen if the dollar continues to reduce its value?