The slow motion train wreck of the dollar continued today as China called the dollar-based financial system a "product of the past." This continues a trend of international boldness in standing up against a dollar-based world financial system.

"The current international currency system is the product of the past," he said, noting the primacy of the U.S. dollar as a reserve currency and its use in international trade and investment.

The comment is the latest sign that the dollar's future continues to concern the most senior levels of the Chinese government...

Mr. Hu called attention to China's accelerating effort to expand the role of its own currency, describing recent moves to allow greater use of the yuan in cross-border trade and investment--while acknowledging that making it a fully fledged international currency "will be a fairly long process."

When one of your most important creditors starts openly challenging your currency and starts promoting its own, things are getting serious. Talk of dumping the dollar used to be the stuff of whisper campaigns and rumors. Now the president of China is saying these things to the media ahead of a visit to the United States.

With so much talk about the dollar losing its reserve currency status, it's easy to forget how far we've gone down that road. It used to be when we'd hear such a rumor, we'd write it off as nonsense. Now when we see a news story or a quote that challenges the dollar, it doesn't even shock us anymore. Whether that's because the prediction has never come true or because we've reached an attitude of inevitability, it would seem that we've come to a point where no-one really takes the dollar's reserve status for granted anymore.

Except in Washington D.C. where they continue to borrow and spend money we don't have, and where the Federal Reserve continues to print money and thereby debase our currency.

If the world decides to abandon the U.S. Dollar, we certainly won't be able to blame the world. We will only be able to blame Congress and the Federal Reserve which continue to engage in policies that completely undermine the dollar and reduce its attractiveness. In fact, the biggest threats to the U.S. Dollar and our economy are the U.S. Congress and the Federal Reserve.

Congress must slash spending now before the damage becomes irreversible.