Re: Re: strong dollar
Personally, I wouldn't jump to realist conclusions. It's not at all clear to me that Europe and Japan want to face the crises that would follow a precipitous fall in the dollar. Peter Chris Burford wrote: At 28/01/02 20:28 -0800, Peter Dorman wrote: In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, fundamentals (the chronic US current account deficit) would express themselves much sooner. Does that not mean it is in the interests of Europe and Japan to start creating, no doubt by stealth, an alternative to the dollar as world money? That would mean that the relative advantage of having your currency as world money, is shared out. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. Europe and Japan will presumably have to take advantage of this under cover of international cooperation. Could they be willing to let their currencies fall until the point at which this undermines the advantages that the USA gets from its strong dollar policy? Then would they have reforms ready that would change the system, or just make minor repairs so it essentially continues with the mechanisms of unequal exchange. I suspect that talk about international development of poor countries may be a proxy for this power play about the shape of the world economy. Chris Burford London
Re: strong dollar
In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, "fundamentals" (the chronic US current account deficit) would express themselves much sooner. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. I agree that it is good to be hawkish on worker rights and to recognize that this is just a small piece of the larger package bearing down on workers in the North (and South). My guess is that the two biggest pieces are the permanent debt overhang (and associated addiction to trade surpluses and inward capital flows) in the third world, and the "liberation" of financial capital from national regulation. But the importance of the global collapse of the political left (left parties in power or contending for power) should not be discounted. (The rightward shift of the social democrats such that they are no longer really "left" is one aspect of this collapse.) This collapse is a result of the economic context, but it also contributes to it. My whirlwind version of a much longer argument... Peter "Stephen F. Diamond" wrote: Isn't the strong dollar the effect of foreigners continued, increasing willingness to invest in dollar assets, as indicated by the 4-500 bn. net capital inflows into the U.S. economy per annum over the last couple of years? This would seem to contradict the idea the impact of China. I tend to think of China, for example, as having a deflationary impact on certain narrow strands of the economy, particularly characterized as having reached near-commodity like production standards requiring relatively less sophisticated labor. Though I am a hawk on advocating international labor rights, particularly in China, I am not in agreement that that is somehow the most dominant issue facing organized labor in the U.S. or Europe, relative to the dramatic restructuring of the jobs that remain and in light of the fact that something like 70% of cross border capital flows are between the triad countries.
Re: strong dollar
At 28/01/02 20:28 -0800, Peter Dorman wrote: In the narrow sense, the strength of the dollar can be attributed to the weakness of other currencies, especially the yen and the euro. The downward pressure on those two will continue for some time, I think. If there were a viable rival to the dollar, fundamentals (the chronic US current account deficit) would express themselves much sooner. Does that not mean it is in the interests of Europe and Japan to start creating, no doubt by stealth, an alternative to the dollar as world money? That would mean that the relative advantage of having your currency as world money, is shared out. In a larger perspective, US foreign policy has been run to create the structural conditions for continuing the dollar as the reserve/key currency. It's not so simple, of course, but I think that's the main effect. If/when the dollar falls, it will set off a political crisis of succession as severe perhaps as the economic crisis. Europe and Japan will presumably have to take advantage of this under cover of international cooperation. Could they be willing to let their currencies fall until the point at which this undermines the advantages that the USA gets from its strong dollar policy? Then would they have reforms ready that would change the system, or just make minor repairs so it essentially continues with the mechanisms of unequal exchange. I suspect that talk about international development of poor countries may be a proxy for this power play about the shape of the world economy. Chris Burford London
