Analysis: Blame the dollar

The US economic power horse is running out of ideas and cash as it jostles with a massive national debt, housing and financial crises, rising inflation, and a depreciating currency.

… As America struggles to avoid recession, the world economic order appears to be heading for a drastic overhaul.

Despite a trend by some economists and politicians to blame the current food and energy commodity price hikes on Opec or overpopulation, there is a clear picture emerging of deep structural problems in the world economy.

… The situation is ironically exacerbated by a significant rise in prosperity and consequently in the volume of global trade in recent years.

… This has changed the economic dynamic of north-south and east-west dialogue. Some 50 years ago, 80 per cent of the world’s population lived in low-income countries. Today, that proportion has been turned on its head with four billion – around 65 per cent – living in middle and high-income countries.

… Why would Russia continue to amass a rapidly deteriorating currency in its reserves at a time when its own economy is stronger than most others? Why indeed would any country want to continue trading in a currency that harms its terms of trade?

Al-Jazeera