Six against one! That's pretty even for economists.
As an economist myself, I would note that when Thailand crashed in 1997 about twenty five percent of the value of assets was lost in Asia! This certain spurred growth in Asia and the problem of liquidity was resolved. The Asian crisis was triggered by a volcano and bad weather!
The big issue is the exchange rate between China and USA. As a US dollar depreciates China might decide its present strategy of dollar holdings is too risky and urge the world into the SDR, which I believe would be a good thing. It would change the role of the IMF, IBRD, and BIS institutions significantly.
The US dollar volatility is likely to increase as its conflicting roles in both trade and investment become more apparent to all scales of markets and governing institutions, pension funds, energy investors and property developers.
The key role of the US dollar has been a vehicle for financial instability. Gold is not a likely option, so an enhanced role for the SDR, institutionally determined gold, seems likely.
The break with the past would be that the SDR would become a privately traded currency against which the world currencies would float as the role of the US dollar in all forms of international transactions was very gradually reduced.
In the end, Keynes will unavoidably win. There is no other future than a Keynesian future spurred on by low interest rate and mismanagement of dollars and dollar assets by American banks.
Arthur
Sketches from scratches: http://Woohs.blogspot.com
