I refer back to an item that says that the conservative desocialising agenda is at work under George w. if so and I am sure cuts in social spending are abound, then to what degree is a fall in the average level of education of the American working class fosters ultra nationalism and imperial aggression abroad, or does it really matter how social spending goes in America since the ideological framework of education and everything else fosters a sort national chauvinism sentiment across classes, and therefore, in the absence of a strong counter internationalist ideology, nothing short of an environmental calamity will bring humanity together. at least in the foreseeable future.
Michael Perelman <[EMAIL PROTECTED]> wrote:
Business Week recently had an article that seemed to agree with
Peter. I did not save the ref, but it was from the last few
weeks.
Peter Dorman wrote:
> Devine, James wrote:
>
>> 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?
>
> My suspicion is that the private inflow of investment has not
> kept up with the US need for half a trillion a year. Certainly
> not in equities, and perhaps also not in debt assets, due to
> possible exchange rate risk. The dollar is indeed the world's
> liquidity, but its days (OK, years) are certainly numbered, and
> sensible investors would want to avoid too much exposure. As I
> recall, there was also a year during the early 80s when foreign
> CB's stepped in to cover for the reluctance of private
> wealth-holders. I'm guessing that 2002 will also turn out to
> be such a year, but I could be wrong.
>
> As to why the CB's would do this, you could take your pick from
> (1) it's not in anyone's interest to have the dollar crash and
> bring down the global economy with it, (2) they are protecting
> the private positions in the dollar taken by t! heir own
> nationals in particular, (3) they are supporting the US as a
> bastion of free-market rectitude, and (4) they are supporting
> an overvalued dollar to sustain their own export surpluses.
>
>> >... 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.
>
> The strength of the dollar depends entirely on the willingness
> of the rest of the world to accumulate them at the rate of
> one-half trillion a year. Private wealth-holders will do so
> based on expectations of risk (exchange rate and liquidity) and
> rate of return. Public dollar repositories (CB's) will do so
> for either economic (including liquidity) or political
> reasons. It seems to me that the Bushies cannot afford to
> alienate the interests that govern CB decision-making. The
> current military power buildup may be seen as a basis for
> supporting the dollar (an implicit quid pro quo if you will),
> or it may be seen as reckless and overly unilateral. How would
> you analyze the effect of US militarism on the willingness of
> CB's to accumulate dollars?
>
>
>> >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
>
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail [EMAIL PROTECTED]
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