It's possible that the simplest explanation is the correct one: the high
dollar represents a flexing of US political and financial power. From the
standpoint of US-based finance, the high dollar asserts the primacy of the
US as the financial center. In international terms, US financial
institutions have the greatest assets and its markets have the highest
capitalization. Entities earning dollar profits are in a position to have
their way with entities whose earnings are denominated in other currencies.
>From a government standpoint, the strong dollar bolsters the prestige of US
political elites and amplifies the leverage of the US in international
organizations. In a sense, it is the same constellation of interests that
impelled England to strive for overvalued sterling after WWI.
In the US case, there is little risk of a forex crisis for the time being,
because the key currency status of the dollar appears secure, and gold is
out of the question as potential constraint. As long as the US can borrow
at will, with negative savings rates making up for current account leakage
(or hemmorhage), why not keep going with it?
PeterIt's possible that the simplest explanation is correct: the high dollar
represents a flexing of US political and financial power. From the
standpoint of US-based finance, the high dollar asserts the primacy of the
US as the financial center. In international terms, US financial
institutions have the greatest assets and its markets have the highest
capitalization. Entities earning dollar profits are in a position to have
their way with entities whose earnings are denominated in other currencies.
>From a government standpoint, the strong dollar bolsters the prestige of US
political elites and amplifies the leverage of the US in international
organizations. In a sense, it is the same constellation of interests that
impelled England to strive for overvalued sterling after WWI.
In the US case, there is little risk of a forex crisis for the time being,
because the key currency status of the dollar appears secure, and gold is
out of the question as potential constraint. As long as the US can borrow
at will, with negative savings rates making up for current account leakage
(or hemmorhage), why not keep going with it?
PeterIt's possible that the simplest explanation is correct: the high dollar
represents a flexing of US political and financial power. From the
standpoint of US-based finance, the high dollar asserts the primacy of the
US as the financial center. In international terms, US financial
institutions have the greatest assets and its markets have the highest
capitalization. Entities earning dollar profits are in a position to have
their way with entities whose earnings are denominated in other currencies.
>From a government standpoint, the strong dollar bolsters the prestige of US
political elites and amplifies the leverage of the US in international
organizations. In a sense, it is the same constellation of interests that
impelled England to strive for overvalued sterling after WWI.
In the US case, there is little risk of a forex crisis for the time being,
because the key currency status of the dollar appears secure, and gold is
out of the question as potential constraint. As long as the US can borrow
at will, with negative savings rates making up for current account leakage
(or hemmorhage), why not keep going with it?
Peter
