“As U.S. politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world,” China’s official state-run news agency, Xinhua, said in an English-language commentary last month.
China is the largest foreign holder of US debt, with about $1.3 trillion in Treasury bonds, and probably more in other dollar-denominated investments, according to observers. Now, the world’s No. 2 economy is taking matters a step further by hoarding gold and not letting it leave the country. Despite these actions, experts agree that a replacement for the dollar remains a long way off, since the yuan, euro and yen all lack the liquidity of the dollar—but a replacement is coming and that will have major repercussions for Americans as the US is currently the only country in the world that doesn’t have to pay for its imports or its debts in a foreign currency.
“Treasury bonds and other dollar-based investments are used as the main form of collateral worldwide, so questions about their security would cause more problems than the financial system failures in Fall 2008,” Benjamin J. Cohen, an international political economy professor at UC Santa Barbara, told The Wall Street Journal. “It would make the Lehman Brothers episode look like a garden party by comparison.”
While the rest of the world is left to watch and wait for Washington’s next move, the ball is firmly in the hands of the American public—vote them out. Left or Right in Blue States and Red States. It may not be enough to stop the decline of US influence in the world, but at least it will put the do-nothings in both parties on notice.