Should we Fear Loss of the Dollar as a Reserve Currency?

Op-Ed Contributor - The Almighty Renminbi? - NYTimes.com: "THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear."

Good article but I am not convinced that exiting the world currency role would be bad. While ringing his hands, Nouriel Roubini, cites only one impact ... our inability to borrow at low rates. Isn't there a flip side? When sop much of our currency is controlled by the rest of the world, the US central bank really has little control over our money supply. We have little ability to revalue the dollar for the simple reason that the major benchmark of the dollars value is the dollar itself.

The dollar's reign is now sixty years old, but in that time Japan, China, Brazil, Canada and Europe have done rather well .. rising against our standard, in some cases passing that standard of living. While loss of the dollar as the world currency would mean, as Nouriel Roubini says, that our price paid for commodities would be higher, wouldn't this improve our ability to control the trade gap?

Nouriel Roubin suggests that the Chinese currency might one day replace the dollar? I suspect thsi is hokum. The dollar functions as a world currency, in large part, because we has so little control over it. China's much more managed economy, in contrast has huge ability to control the renminbi, Would the Saudi or Russians sell oil if they new the buyer could control the vlaue of his own currency?

DETROIT (AP) - As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the U.S. have created a political problem for the automaker and the White House.