The Dollar Crisis: Causes, Consequences, Cures

Could many of our economic troubles be linked to the simple fact that the dollar stopped being pegged to gold thirty years ago? Absolutely, says author Richard Duncan. To illustrate his point, he puts forward numerous disconcerting statistics to explain the tremendous changes that have taken place in exchange standards. In 1970, for example, gold comprised the majority of total reserve assets; by 2000 it had shrunk to only 2 percent of reserves. Duncan, who was based in Asia for many years, recounts the history of gold's link to the dollar and the repercussions of its removal from this standard—particularly the financial crisis in Japan in the 1980s followed by the rest of Asia in the early 1990s. He rather gloomily predicts that mounting debt caused by the floating exchange will inevitably result in a global economic crash. As an antidote he prescribes measures such as setting a global minimum wage and imposing fines on countries with imbalances in their current accounts.