Thursday, April 2, 2009

Is Reserve Currency Status Worth the Costs of Empire?

Bill Maher is not entirely correct. We do get something for being an empire: the dollar is the reserve currency of the world. But is being able to borrow cheaply worth the costs of maintaining our empire? (Of course, this won't even be a tradeoff, if Geithner continues to open the door for an IMF world currency to replace the dollar as the reserve currency). Count Roger Cohen among those who think a reduction in American overseas military commitments inevitable as part of a larger retrenchment. America will not be able to afford to be the world's policeman for much longer. In the long run, this is a postive development - the insidious influence of the military-industrial complex on our government has been apparent from the beginning. Hopefully, Cohen will be right, and Asian democracies like India and Japan will embrace greater responsibility for ensuring global security in conjunction with the United States. But in the short run, America is weakest when social and political stability is under the most strain. The Pax Americana could very well go out with a bang. Let us hope not.

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