Peter D writes:>...
I'm wondering whether foreign central banks are already financing the
US current account deficit, in light of the weakness in US financial
markets. <
don't you think that it's foreign financiers that are doing so, rather than central banks? they're buying up US assets, allowing the US to run a current account deficit. If the CBs are doing anything, it's accumulating dollars and dollar-denominated short-term assets because they are useful reserves (since the dollar acts as world money). Do you think that the CBs play a big role?
>... If so, what implications, if any, does this have for global
political economy? How can we explain Bushite unitaleralism and
in-your-face hegemony in light of the increasing fragility of the US
external position?<
the role of the dollar as world money is based on the power of the US. Bushite hegemonism seems just one way to maintain and extend that power, centering on the military side. The Clintonoids put greater emphasis on the financial/economic side of US power along with trying to encourage consent among the governed, don't you think? But these are variations on a theme.
>Moreover, if we assume that serious money is now international
(international portfolios and their mirror-image, international
ownership of corporations, financial institutions and tradeable funds),
how do we think about the constraints, if any, on US economic policy?
(It doesn't look like we have vehicles for domestic constraints at the
moment.) Or is US policy really reflective of a global consensus among
the rich?<
maybe a consensus, but one that reflects US power.
It's quite possible that the value of the dollar is currently too high given the level of US power. But we can't know for sure.
Jim
