Whether the Dollar Collapses or Not, the Issue Is Not Simple

There is much talk currently about the U.S. debt ceiling and the disagreement between the U.S. Congress and president, and therefore the concern experienced by some people as to this ceiling and whether or not it should be lifted, which has become a preoccupation for them. Yet, in the end, the Congress will respond to the president and the debt ceiling will be raised, within an interest rate close to zero (in these days as a result of the current low interest rate and the current inflation). Perhaps everyone is wondering whether the world will head toward a new political and economic power, whether a new currency will emerge to replace the dollar and a new era will begin and whether there will be a potential candidate that could replace the United States on the international arena and will have the same or higher economic power.

The dollar currently plays more than one role. The first is that of the currency used within the United States of America as any currency in any country, with the Federal Reserve taking charge of it. The dollar derives its strength from that of the U.S. economy, which continues to be an influential power regardless of the population, either in terms of consumption or production. The second role played by the dollar is that of the currency used for exchange by different countries in the world to support the activity of the global trade. Perhaps this second role — the world’s need of a strong currency to be used in circulation and as an important unit to support the global trade — has contributed to the expansion in the issue of the dollar bank note conducted by the U.S. government. Much of the expansion in the issue is meant to finance the global role played by the U.S. government to support the political role they play throughout the world. Perhaps the support of the American role might be the lack of a superpower and a strong economy, besides a desire to play a role at the level of the political map. Currently neither Europe nor Japan want to play any role for their currencies; besides, China, despite its financial strength, cannot exclude the role of the U.S. because of the military force it enjoys.

But there is a question that needs a certain type of treatment and a fashion to raise by researchers concerning whether the U.S. economy is weak and lacks enough ingredients to enable it to stand in the face of the winds of change. Let’s consider a reality where the intellectual property and the patents owned by the U.S. economy are the starting point for us in the light of the negative momentum it undergoes. It attains, as shown by statistics in 2005, about $5.5 trillion, whereas the size of the U.S. debt is of $14.46 trillion.

The U.S. economy is still a considerable force, and it affects the growth or downturn trends in the world from the various indicators. Regardless of the actual size of the United States’ debt caused by spending, it is likely to be covered thanks to its assets, natural resources and business sectors to attract more investment, in addition to the political weight and the role that it represents in the world. If we look at the volume of consumption, as an influential force in the world and the population which is not growing as that of Africa, Europe, Japan or other countries in the world, we will find out that it attains $8 trillion.

The national income of the United States, according to the latest statistics, is $13.52 trillion; when compared to the national income of the world as a whole, which attains $65.61 trillion, we come to recognize the importance and the weight of the U.S. economy. The U.S. economy equals one fifth of the world economy, whereas the population of the United States is less than that of several countries and does not exceed even one tenth of the world population. Therefore, we realize that the U.S. economy, whose national debt attains 95 percent of its national income, enormously contributes to the support of the global economy.

The United States of America is a continent at all criteria; a rash consideration of its loan in light of its role as a superpower makes us rush to judgement when comparing it to other countries as to its national debt. Presently, no currency is eligible to act as an international currency. Even as a basket of currencies and precious metals is far from being reached, in addition to the fact of technical excellence, the patents and wealth invested by American companies in the world will eclipse the dollar and the other currencies from circulation, in my humble opinion.