Perkier economy pushes dollar back down the slide

Washington Post, Sept. 10, 2009 page A18: "Huo-yue-de-jing-ji" in Pin Yin system of romanization in Chinese.

A major shift in the dollar's role as a reserve currency is unlikely to happen anytime soon, economists say, citing a dearth of viable alternatives, And China continues to amass dollars and Treasury securities,Marc Chandler,global head of currency strategy at Brown Brothers Harriman said.

Comment: Such view is similar to my past blogs since US Dollar is almost an international currency in doing business for decades.

"There are scenarios that could diminish the dollar's appeal as a reserve currency. The federal government could fail to curb deficit spending. Inflation in the US could spiral out of control. But experts don't believe those scenarios are probable. " Menzie David Chinn, an economist at the University of Wisconsin said.

I agree with such rationale to a point but we need to witness empirical evidence in the months to come.

Cornell economist Roert II. Frank published an article entitled "Cause and Effect" i.e. Etiology as I reasoned in my prior blogs. He has been trying for years to bridge the gap between the classroom and the real world. - his vision of economics is broader and more thought-provoking. Frank used economic principles to explain quirky questions of everyday life. That is exactly what I have had in my mind in watching economics in action such as economic issues of the day especially Sino-American Economics in the headlines.

Prof. Frank cited total spending i.e. aggregate demand that determines output and employment.

Comment: Such explanations of the Keynesian Model with contractionary or expansionary gaps would remain to be seen during the course of economic recovery. However, the lifestyle of the folks can hardly be measured in human behavior. Consumption tax i.e. VAT was mentioned in "Keys for Economic Understanding" published in 1971 and 1976(Keys to Economic Understanding" www.ask.com for reference.

Francis Shieh a.k.a. Xie Shihao, a graduate student from Shanghai witnessing US-China economics in the positive scenario for cooperation re mutual benefit in the 21st century.

Thursday, September 10, 2009 at 12.30 p.m.