Will Leftists Launch "Currency Trutherism" Against Nouriel Roubini?

You know, I'm no economist, but I'd say Nouriel Roubini is vindicating some of my recent economic analysis on the role of the dollar as the international reserve currency. In a couple of posts, especially, "Leftists Launch "Currency Trutherism" Against Bachmann," I showed that Representative Michelle Bachmann's concerns over the replacement of the dollar as the world's reserve currency were well founded. As I noted:

Bachmann's proposed resolution to protect the dollar as the country's sovereign unit of exchange is perfectly justified in light of monetary history and the outlandish comments from Secretary Geithner. Advanced economies are not inoculated from supranational pressures toward monetary homogenization or unification, as the case of the European Union indicates. Once Ms. Bachmann refers to "One World Currency," the only logical reference point is to a national currency unit that would replace current dollar hegemony worldwide.

So, I'm frankly getting a kick out of Nouriel Roubini's essay at the New York Times this morning, "The Almighty Renminbi?", via Memeorandum.

Roubini's made a big name for himself recently with a series of prescient articles on the scale of economic collapse (see, "The Coming Financial Pandemic," from Foreign Policy, March/April 2008). He's something of a "Chicken Little" if you ask me, but my interest here is whether leftist airheads will start attacking him for his "black copter" currency conspiracies:

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.

Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time.

But what could replace it? The British pound, the Japanese yen and the Swiss franc remain minor reserve currencies, as those countries are not major powers. Gold is still a barbaric relic whose value rises only when inflation is high. The euro is hobbled by concerns about the long-term viability of the European Monetary Union. That leaves the renminbi ....

The renminbi, rather than the dollar, could eventually become a means of payment in trade and a unit of account in pricing imports and exports, as well as a store of value for wealth by international investors. Americans would pay the price. We would have to shell out more for imported goods, and interest rates on both private and public debt would rise. The higher private cost of borrowing could lead to weaker consumption and investment, and slower growth.

See also Clusterstock, "Roubini: The Dollar's Dead, China's Renminbi is the World's New Reserve Currency."