Tags: Shilling | Dollar | survive | Gloom

Gary Shilling: Dollar to Survive Global Gloom

Monday, 12 Dec 2011 07:59 AM

Economist Gary Shilling says not to worry, the U.S. dollar will be just fine.

"Forget the worries about America's economy, its credit rating, and its debt," Shilling writes in The Christian Science Monitor. "The United States has one sure thing: the dollar."

"The primary international trading and reserve currency since World War II is likely to keep that status for decades."
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Growth, size, market development, and open economy and few alternatives are the reasons why the dollar will remain paramount, says Shilling.

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(Getty Images photo)
“History's first criteria is rapid growth in a nation's gross domestic product and its GDP per capita,” Shilling says. “With robust productivity growth, the U.S. has excelled among developed countries … America's emphasis on entrepreneurial activity and its superiority in new technologies suggest this lead will persist.”

A dominant global currency, Shilling notes, is typically found in a large economy, often the world's biggest.

“With rapid productivity growth and relatively open immigration, America will probably continue in this role,” he says. “Last year, China surpassed Japan to become the world's second-largest economy, but still had GDP of only 40 percent of America's.”

The depth and breadth of financial and other markets will continue to favor the U.S., says Shilling.

“American stock market capitalization is four times that of China, Japan, or Britain and is over three times that of the eurozone,” he observes, adding that percent of U.S. Treasurys are owned abroad.

America's free and open financial markets and economy also favor the dollar, says Shilling. Moreover, a notable of substitutes “is also likely to keep the greenback on the international currency throne for many years.”

The Sydney Morning Herald reports that China’s export growth slowed to the weakest pace since 2009, making the government more likely to further ease policies to sustain the expansion of the world’s second-largest economy.

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Economist Gary Shilling says not to worry, the U.S. dollar will be just fine. Forget the worries about America's economy, its credit rating, and its debt, Shilling writes in The Christian Science Monitor. The United States has one sure thing: the dollar. The primary...
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Monday, 12 Dec 2011 07:59 AM
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