End of the Dollar Hegemony

Sometimes I come across something on the Internet that seems so fantastic, so insane that I've got to check the source. I was looking over Reasonable Rant's page and I came across a speech by Congressman Ron Paul (R-TX), which discusses the power and backing of the dollar from a historical perspective. I, like thousands (if not millions) of Americans don't really know much about the economy, and frankly think of it as a magical and inaccurate science somewhere between astrology and alchemy. Half of us think there's a Gold standard, and the other half don't care. If you don't happen to be Allen Greenspan then you really should check out this article. Money quote:

"In the short run, the issuer of a fiat reserve currency can accrue great economic benefits. In the long run, it poses a threat to the country issuing the world currency. In this case that's the United States. As long as foreign countries take our dollars in return for real goods, we come out ahead. This is a benefit many in Congress fail to recognize, as they bash China for maintaining a positive trade balance with us. But this leads to a loss of manufacturing jobs to overseas markets, as we become more dependent on others and less self-sufficient. Foreign countries accumulate our dollars due to their high savings rates, and graciously loan them back to us at low interest rates to finance our excessive consumption.

It sounds like a great deal for everyone, except the time will come when our dollars-- due to their depreciation-- will be received less enthusiastically or even be rejected by foreign countries. That could create a whole new ballgame and force us to pay a price for living beyond our means and our production. The shift in sentiment regarding the dollar has already started, but the worst is yet to come."

If any one's got comments on this I'd really like to hear them. Logically, and empirically I've often thought that the sale of our industries overseas has lowered the wealth of our nation, and we've been using our military to keep our dollar afloat. Of course its not prudent financial planning but when something starts wrong it usually ends wrong.

The entire text of the article is here: http://www.house.gov/paul/congrec/congrec2006/cr021506.htm