A repy to the Roubini letter to the editor in the NYTimes
'The Almighty Renminbi' A rejoinder
Mr Roubini: As you warn of the potential ascent of the renminbi why not also warn of the end of the world? It’s about as pressing an issue.
Nouriel Roubini’s article on why the renminbi could become the next super currency, or reserve currency, misses any number of crucial points.
In terms of nuts and bolts:
Addressing the lessons of history: The world is no longer on a gold standard. The old metrics of history on the characteristics of reserve units should been read with caution and re-written for these times. Countries today, need to acquire currency reserves in a floating exchange rate environment. Conversely, on a gold standard they needed to acquire gold (you do that by running a current account surplus, by the way). So forget history and the notion that reserve unit countries are surplus countries. That worm has turned: been there, done that.
Dollar fragility: There are certainly issues that the US needs to address, mostly in terms of making US assets safe for acquisition by overseas investors and protecting the value of the dollar by keeping inflation low (a Fed task). Protecting the policy of free trade would also help to assure the place of the dollar.
Beyond nuts and bolts: Even more fundamentally,