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The Dollar Crisis: Causes, Consequences, Cures.



By Richard Duncan

[pounds sterling]25 John Wiley & Sons

ISBN 0-470-82102-7

This book's theme echoes what two of African Business' senior contributors have been writing in recent months. Both Moin Siddiqi's View from the City column 'New Year Blues for the US Dollar' (African Business February 2004) and Milan Vesely's article 'Enmeshed in Alien Troubles' (African Business March 2004) have addressed the potentially destabilising effect on Africa's economies of a rapidly devaluing US dollar.


In The Dollar Crisis, Richard Duncan provides his explanation of the nature and origin of the imbalances that have caused the dollar to plummet--primarily the US's enormous trade deficit. This huge deficit, representing 1.5% of annual global GDP, is being financed through debt that is creating 'disequilibrium' in the global economy and an economic bubble in the US. When that bubble bursts, Duncan fears, the world will be unable to avoid a very severe economic slump.

The Dollar Crisis is divided into four parts. Part one describes how the US trade deficits have destabilised the global economy by creating a worldwide credit bubble. Part two explains why the US's giant trade deficits cannot be allowed to persist, and why a US recession and a collapse in the value of the dollar are unavoidable.

Part three analyses the extraordinarily harmful impact that a US recession and a further collapse of the value of the dollar will have on the rest of the world.

The fourth and final part offers recommendations that, if implemented, would help mitigate the damage of a future downturn of the world's economy and put in place the foundations for balanced and sustainable economic growth in the decades ahead.

As the chief economist at Merrill Lynch in Japan, Jesper Koll, states: "Make no mistake--much of the discontent with the global financial system is rooted in the dollar standard. The risk of a dollar crisis is real, and Richard Duncan's book deserves much praise for clearly exposing a force that many seek to deny."
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Title Annotation:Books
Publication:African Business
Article Type:Book Review
Date:Jun 1, 2004
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