Monday, April 11, 2011

'World needs new reserve currency'

Nobel Prize winning economist Joseph Stiglitz

Source: Press TV

A prominent American economist says the world needs a new global reserve currency to avert trade imbalances that are reflected in the US national debt.

In an interview with Bloomberg on Sunday, Nobel Prize winning economist Joseph Stiglitz said that a “global system” is needed to replace the dollar as a reserve currency and help avoid a weakening of US credit quality.

“By taking off the burden of any single country, we don't have to have trade deficits,” the Columbia University professor pointed out.

“Things would be much worse if it were not the case that Europe was having even more of a problem, but winning a negative beauty pageant is not the way to create a strong economy.”

“The likelihood of the US government failing to honor its financial obligations and in particular make due and full payments on US Treasury securities is extremely low,” according to the international Fitch Ratings agency.

Americans appear to be growing nervous, and that unease could take an economic toll.

Consumer sentiment fell in March to its lowest level since November 2009. With oil prices rising, Americans' confidence in the economic recovery has taken a sudden plunge.

The financial and psychological strains appear to be encouraging Americans to cut back. Already, one in every three consumers has cut spending due to rising prices.

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