MAPI: Twilight of U.S. Dollar Now 'Far More Urgent' - Modern Distribution Management

Log In

MAPI: Twilight of U.S. Dollar Now ‘Far More Urgent’

Current conditions are threatening the dollarized financial system.
Author
Date

Within the international financial system, currency manipulation and commensurate mercantilist policies are having a serious adverse impact on U.S. trade and threaten the longstanding dollarized financial system, according to a new report from the Manufacturers Alliance for Productivity and Innovation.

In Twilight of the Dollar with Technology-Intensive Manufacturing at Center Stage, Ernie Preeg, senior advisor for international trade and finance for MAPI, contends that the U.S. faces a dollar twilight dilemma that will result in a substantial decline in the dollar and the phasing down and out of the dollarized financial system of the past seven decades. The report presents the dramatic decline in U.S. export competitiveness for manufactures since 2000 and the related buildup of official debt to foreign countries.

“The eventual decline of the dollarized financial system has been recognized for more than a decade,” Preeg said. “But at that earlier time there was little sense of urgency for major new policy initiatives. Most noteworthy in retrospect, China was not yet a major trading nation, with U.S. exports of manufactures in 2000 three times larger than Chinese exports. The global structure of trade had changed greatly over the ensuing 13 years, however, making the twilight zone of the dollar a far more urgent and important policy challenge today.”

Among the principal findings in the report are the following:

  • The U.S. share of global exports of manufacturers declined sharply from 19 percent in 2000 to 12 percent in 2012, while the EU share was down from 22 percent to 19 percent, and the Chinese share soared from 7 percent to 22 percent.
  • From 2009 to 2012, the trade imbalances of the five largest exporters of manufacturers, who account for two-thirds of global exports, all increased greatly: the Chinese surplus rose by 92 percent to $866 billion, the EU surplus rose by 110 percent to $480 billon, the Japanese surplus rose by 32 percent to $292 billion and the South Korean surplus rose by 50 percent to $206 billion. In the opposite direction, the U.S. deficit rose by 61 percent to $516 billion.
  • In the first half of 2013, Chinese exports of high-technology industries grew by $53.5 billion while U.S. exports were up only $4.7 billion.
  • Foreign holdings of U.S. official debt quadrupled since 2000 to more than $10 trillion, which means that a 1 percent increase in interest paid on this debt raises the current account deficit by $100 billion.

Preeg argues for a comprehensive U.S.-led policy response to the fundamental changes in the trade and financial systems, and for an integrated network of free trade agreements linked to the IMF obligation for market-based exchange rates. 

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.