eichengreen

Before 1914, Eichengreen says, the British pound, the French franc, and the German mark were all international currencies.

"The only plausible scenario for a dollar crash" , Mr Eichengreen concludes, "is one in which we bring it upon ourselves. "

The Eichengreen-Irwin theory says Britain, with its cheaper currency, should have been among the freer traders.

In theory, Eichengreen insists, the renminbi's rise as a global currency is no less implausible than was the dollar's around 1920.

'The danger is of a disorderly adjustment, of investors losing confidence in the dollar, ' says Mr. Eichengreen, the Berkeley economist.

And Eichengreen concluded that this "procedural" obstacle to exit made the euro irreversible.

But US dollar policy eventually became so heedless that, in Eichengreen's telling, the euro was set up in self-defence.

As Berkeley's Barry Eichengreen puts it, an attempt to reintroduce a national currency would trigger "the mother of all financial crises. "

The view that the pound kept its pre-eminence long after Britain went into eclipse is, Eichengreen shows, an illusion.

"Domestic political constraints were ultimately responsible for the conference's failure, " Eichengreen writes.

"Growth slowdowns, in a nutshell, are productivity-growthslowdowns, " write Mr Eichengreen and his colleagues.

Countries must strengthen financial regulation and better harmonize it across borders but not necessarily make it uniform, Eichengreen said.

Eichengreen says establishing the renminbi's global clout is good in the long term.

"Adopting the euro is effectively irreversible, " he wrote in an article on the economics website Vox.

"The Fed is going to continue to tread slowly, " said Barry Eichengreen, an economics professor at the University of California at Berkeley.

That leads to the second reason why I think Eichengreen's expectations for the rise of the RMB as a reserve currency are unrealistic.

'The dominant power, 'Mr. Eichengreen writes, 'could no longer act unilaterally but took the lead. '

Eichengreen stresses "how exceptional was the half-century after 1945 when the dollar reigned supreme" .

It probably has "less time than commonly supposed" to close its budget deficits and avert a debt crisis, Eichengreen warns.

"The future of the global reserve system looks a lot like the past of the global reserve system, " Eichengreen said.

Eichengreen argues that one of the main reasons for the current dominance of the dollar was simply the lack of plausible alternatives.

More heavy-handed financial regulatory reform is likely to emerge from the new U. S. Congress in 2009, Eichengreen said.

"From a standing start in 1914, " Eichengreen writes, "the dollar had already overtaken sterling by 1925" .

"It is critically important that they keep that commitment, " Eichengreen said.

I wish Eichengreen were right, but I don't think he is.

"This is a measure of progress, " although it may take months or years before changes actually happen, Eichengreen said.

Yet Mr Eichengreen's recent writings betray a pessimism about the euro's future that is not visible in his book.

Eichengreen notes that Beijing's communist authorities "have lots of levers they can pull, unlike U. S. authorities. "

I am a huge fan of Eichengreen's and read nearly everything he writes.

But there's another, more worrisome possibility. Eichengreen describes it like this

Out-of-step policies threaten global growth; Barry Eichengreen