At 22:04 18/03/01 +0000, Jim wrote:
>If the rich countries coordinate monetary policies to prevent this
>scenario, then interest
>rate cuts won't affect the demand for U.S. goods via exchange rates. It
>would have to be
>by a generalized reflation, by most of the rich countries.
This is likely. But the sequence of who reduces rates most, and in what
order, may create further instabilities.
It is no longer clear as it was after the Asian financial crisis, that
Europe and Japan have to cut rates in time with the USA to allow the USA
generously to become the spender of last resort.
BTW isn't the state lowering of interest rates also a form of destroying
capital? - that is by diluting it so it can no longer command the same
interest rate? How exactly is it done?
It is high time they addressed the needs of the world economy as a whole
and not just that of the metropolitan centres of capital. It is even
getting to the stage where in their own self interest it would be more
rational to do that.
Chris Burford
London
