this discussion is interesting, but it's between two admitted ignorami (Rob
& myself). Is there anyone on pen-l who knows -- or has some sort of
journalism-based knowledge -- of why the U.S. has pursued a "high dollar"
policy?
At 04:57 PM 06/12/2001 +0000, you wrote:
>G'day Jim et al,
>
> > that works, assuming that the U.S. can continue to accumulate >
> external debt with no negative consequences (like a move away from >
> the US$ as the main reserve currency). But was it the U.S. intent?
>
> >From the administration's point of view, it may be that negative
> consequences
>are immaterial if they can reliably be delayed until after their eight years.
>It might have suited some foreign policy priorities, too, but more guesswork
>on that below.
>
> > >(2) it makes stuff denominated in greenbacks (like oil) cheaper;
> >
> > for whom? not for those of us with US$.
>
>Well, what if, say, the oil was to be denominated in a relatively strong Euro?
> A foreseeable circumstance, or not?
>
> > >(3) it makes foreign productive assets cheaper in a period of >
> intense consolidation;
> >
> > it allows US-based capitalists to take over foreign assets on the
> > cheap? that fits.
> >
> > >(4) it helps the consumer keep the economy bubbling along;
> >
> > yeah. A high dollar is based on loaning to the U.S., which in turn
> > involves lending to consumers. But was that its intent? For many, the
> > consumption boom was a surprise.
> >
> > >and (5) it keeps the Euro from looking like an alternative.
> >
> > but a "high US$" involves massive loans to the U.S. while a "low >
> Euro" helps Euroland's exports and restrains its imports.
>
>Might party-political short-termism be relevant here, too? Or the firm belief
>that America's advantage in high-tech offered the economy sustained
>productivity/profit advantages sufficient to cover a daily billion or two in
>foreign debt? Beyond PEN-L, it was pretty hard to find committed skeptics
>between '96 and '00, after all.
>
>Or, to get a bit Leninist about it ... Europe is a serious rival in the
>making. If Washington wants to cut it down to size a bit, perhaps the early
>days are when to poison it. The high dollar indirectly puts a lot of pressure
>on the rival Eurosuits. The Euro's fortunes are important PR during these
>early days - Duizenberg has to apologise for every droop. The lower the
>Euro, the cheaper its productive assets to American global-merger-magnates in
>particular and American political-economic sway in general. The lower the
>Euro, the better the potentially useful Euro-skeptics look. The lower the
>Euro, the less Europeans buy from the US's other rival, poor ol' underutilised
>Japan. Europe has to buy nearly all its oil, in greenbacks. Europe has to
>buy most of its IT hardware and software, in greenbacks. And, the lower the
>Euro, the less room there is for capital-investment-rejuvenating rate cuts
>rate cuts.
>
>Maybe, then, it was to do with a cost-benefit analysis - the idea that the
>hurt Washington could inflict in the decisive moment outweighed the benefits
>to Europe of a few reasonable export numbers. I could be waaaay too dark in
>these idle speculations (for that's certainly all they are), and have no idea
>as to the maths of this CBA, but if there's no obvious explanation for an
>obviously dangerous high-dollar policy, we might as well prompt it with a bit
>of provocative guesswork.
>
>Cheers,
>Rob.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~JDevine
