The Dollar and the American Economy in the Year 2005

Abstract

This short paper presents a panoramic view about the future development of the dollar as the world main reserve currency, the commonly accepted means of exchange and the source of value to most Central Banks' international monetary reserves. Analysts, regard that the American Dollar to remain as the world's central banks preferred international monetary reserve, has to eliminate the fiscal deficit - induced by the realist policy of financing the world peace and borrowing in its own currency to finance cheap imports into the American market. The long term political problem the dollar faces after loosing the privileged position of being America a net creditor country is being converted into a net debtor dislodging the incumbent currency as happened with the dollar when usurped sterling's role in the world.