NEW YORK (TheStreet) -- Does the United States leadership need to wake up to a new economic era? 

Larry Summers, former U.S. Treasury secretary, seems to think so

The reason, he writes in the Financial Times: "I can think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the U.S. government to persuade dozens of its traditional allies, starting with Britain, to stay out of it." 

He's talking, of course, about the new Asian Infrastructure Investment Bank.

And now there is a possibility of a second loss for America, the failure to achieve passage of the Trans-Pacific Partnership a trade liberalization agreement with 11 other countries (not including China) that collectively account for 40% of the world's economy. 

This has resulted in articles like this in the Financial Times "Round Two in America's Battle for Asian Influence" and one in the New York Times by Roger Altman, former deputy Treasury secretary, and Richard Haass, president of the Council on Foreign Relations, on why a win here is important to the U.S. 

There's more. China seems to be pushing once again to achieve reserve currency status for the Yuan. Each time this subject comes up, it seems as if China is coming closer and closer to its goal to achieve this for its currency. 

The timing of these discussions could not have come at a more interesting time, a time when the value of the United States dollar has been trading at highs not reached in a decade. 

The interesting thing about this is that the rise in the value of the U. S. dollar has come about through basically no effort on the part of the government. It almost seems as if the performance of the U.S. economy and the actions of the Federal Reserve system are out-of-sync with the performance of most other major economies in the world and, consequently, out-of-sync with the actions of most other central banks. 

Exactly where the value of the dollar is going to go seems to be uncertain right now, one reason being that the leadership at the Federal Reserve seems to be uncertain about what it is to do in the near future. 

Summers is correct, that "this failure (on the part of the United States government) of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the U. S. approach of global economics." 

The U.S., since the Bretton Woods system was put into place, has had it really easy. It has been, by far, the dominating economy in the world, with the dominating military force in the world, with the dominating political position in the world. It's currency has been the major reserve currency in the world. 

Economically, what has it done with this? It has inflated the world with its currency. Starting with the "guns and butter" fiscal policy of the 1960s, the Bretton Woods system was abandoned and the value of the U. S. dollar was unilaterally floated in 1971. 

The undisciplined fiscal affairs of the government resulted in a decline in the value of the dollar by more that one-third between 1973 and 2011. And, still the global position of the United States and the United States dollar remained supreme. 

But, finally, times are changing and this is something the government is going to have to face. The U.S. is going to have to accept the fact that a different global structure is evolving and it is not going to be alone at the top as it has been for the past seventy years. 

China, obviously, is going to want to have its say. The Eurozone is attempting to build a trading area that is of similar clout. And, there are other emerging areas that would like to get into the game. The structure of world organizations is going to have to accommodate these demands. 

Furthermore, the U.S. is going to have to realize that it will not be able to just inflate itself and the world in the future as it has done for the past fifty years.  

What the U.S. does has repercussions throughout the world, like causing massive fluctuations in foreign exchange reserves and huge capital flows that can impact debt markets and solvency. These possibilities must be a part of policy decisions. 

The world is in a new economic era. Changes in thinking must follow.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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