Former Fed chairman and Obama economic adviser Paul Volcker says the rise of China and other emerging economies pose a challenge to the United States.
The growth of emerging economies is “symbolic of the relative, less-dominant position the United States has, not just in the economy but in leadership, intellectual and otherwise,” Volcker told PBS interviewer Charlie Rose.
“I don’t know how we accommodate ourselves to it,” Volcker said.
“You cannot be dependent upon these countries for $3 to $4 trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”
“I would like to think that given the history of the past, given the strength, actual and potential of the American economy, we can still provide a kind of indispensable element of leadership here,” Volcker added.
“But it’s not going to be dictatorial, I’ll tell you that. It is very hard to herd these cats together.”
According to Bloomberg, China, Russia, Brazil and India together hold about 42 percent of international reserve assets, excluding gold.
China has overtaken Germany to become the world’s third-largest economy and may soon become the biggest exporter, surpassing Japan a year ago as the main foreign investor in U.S. government debt.
In a recent speech at Johns Hopkins University, World Bank President Robert B. Zoellick warned that, with foreign economic powers rising quickly on the world stage, time is running out for the privileged role enjoyed by the American dollar.
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