| So, what to make of this? I take the seriousness of the argument.
My hunch then is they will shift by degrees, but relatively rapidly, to a concept of meta world money under-written by special drawing rights from the IMF, available to all governments - not least the rich deficit countries like USA and UK, who need their Keynesian conversion sanctified by a massive ideological and administrative conversion to Keynesianism on a world scale. It would be like having gold and silver in circulation at the same time, but the relative exchange value of each in each significant trading centre being measured hourly by supercomputers on indices made transparent to all. Essentially we have it already. The convergence of the currencies of the participating countries into the Euro was a triumph for such technology, but of course it can cope with the exchange value of many form of money fluctuating concurrently. Presumably when they have decided what they want to try modelling, there is an option of playing around with diagrams on a piece of paper and discussing whether the holdings in US treasury bonds by China and Japan, could be underwritten and then substituted with IMF units of exchange value with appropriate cross entries in the state accounts of China and Japan thereby moving towards a more globally coordinated system as suggested by Keynes, if I understand correctly, of the guilt free (and gilt free!) inter-relationship of surplus and deficit countries. My hunch - something like that. Besides, the USA doesn't want to go through this again does it? - just for the honour of running the world currency of default, when the benefits can blow up so unpredictably. What has befallen the US economy is what Osama prophesied on Sept 11 2001, in acted-out form. It's worse than terrifying: it's undignified. Chris Burford ----- Original Message ----- From: "Laurence Shute" <[EMAIL PROTECTED]> To: "Progressive Economics" <[email protected]> Sent: Saturday, October 25, 2008 4:23 PM Subject: Re: [Pen-l] Why is the U.S. dollar regarded as a safe haven. | | | ken hanly wrote: | > But then isn't the Japanese Yen appreciating vis a vis the US dollar? It is not third world but developed world currencies that are really being hit such as Australia, New Zealand, and Canada as well as European countries and also Iceland the best place in the world to live according to a UN survey. | | I thought so too, but last night, on the Bill Moyers program, James | Galbraith argued: | | > BILL MOYERS: What are the negative effects of a soaring deficit? | > | > JAMES GALBRAITH: Well, the one thing I would have worried about is that we might not find lenders who are willing to provide funds to the U.S. government, that the Chinese or the Japanese might decide that they would rather be in some other currency and that we'd then have trouble with inflation. But that's not going to happen. | > | > It's not going to happen because, as it turns out, the major alternative, the euro, simply isn't viable as a reserve asset for the rest of the world. It's the dollar or nothing. So the United States basically can finance itself to the extent necessary to deal with this crisis. And I'm right now quite sanguine about that, quite confident that we won't face a problem. | > | So, what to make of this? | | Larry Shute | _______________________________________________ | pen-l mailing list | [email protected] | https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
