Julien wrote
>
> I'm not sure of what you mean about the US beign the
> banker/lender of last
> resort.
Bceause the dollar is the principal world rserve currency (something
incidentally which depends precisely on the USA being a *debtor*
state, in the same way that when the pound sterling was principal
reserve currency during the 19th C Pax Britannica, Britain too was
then a recipient of large net inflows on both capital and current
accounts, ran a permanent balance of payments deficit, and was a net
debtor: and this has to be so, for if the hegemonic power is not
purchasing imported goods and services with its paper money, then how
can other countries accumulate its currency in the first place? Only a
hegemonic debtor can become a source of international reserves. This
is one reason why the euro caould not become and international reserve
currency any more than the yen or the D-Mark could; because Germany
and Japan are traditionally balance of payments surplus countries,
trading goods and servcies for dollars. What *they* hope is that by
this means they will perhaps one day be able to reverse the verdict of
history in the World War 2, and by accumulating vast US debt, get a
stranglehold on the US economy and eventually destroy all its
competitive advantages. They have come close to doing this several
times, notably in the early 1970s, but have now surely lost the battle
decisively (once the US won the Cold War, it was easily able to
destroy all competitive advantages of Germany and Japan, and has done
so).
The importance of the dollar certainly gives the US
> special capabilities
> like extracting more seignorage and more importantly
> creating credit more
> painlessly. But how is it capable to better or less
> painfully control the price of
> the dollar relative to other currencies?
Precisely because it is 'lender of last resort' and its curency is the
principal international means of payment. Nota bene: only since the
collapse of communism, have the great capitalist states finally
abandoned gold as a reserve medium. The reasons for extensive Central
Bank gold sales do not get as much attention as they should: it is a
sure sign of final and complete capitulation of Germany-led Europe and
Japan-led Asia to US hegemony in the guise of the 'new global
economy'. Since they have surrenedered monetary sovereignty, they no
longer need gold and are content to hoard paper dollars, knowing full
well that a dollar crisis and dollar devaluation is simply inevitable.
This is paradoxical but true: it means that the criminals understand
that they must either hang together or hang separately. This is the
essence of neoliberal globalism as a strategy for continues domination
of the West under US tutelage.
> Any country can
> make the price of its
> currency sink. Making it go high is harder and the US seems
> to have a worse
> position than other rich countries there because of the
> huge number of dollars
> around: the "markets" can react much more strongly to a
> strong dollar policy
> than to a strong yen policy f.ex. because there's so much
> more dollars out
> there that can be sold if the dollar is seen as overvalued.
I think the opposite is true. The US is the unchallenged hegemon, and
its ability to make other states accept its potentially-worthless
paper money in exchange for their real goods and real services, is an
index of US power. As Rob Schaap pointed out, the rest of the world
finances the US boom to the tune of $1.5 bn per day.
>
> Well...
> If you have the time and the desire to do so, please post a
> summary of some
> kind of this theory (written by you or someone else).
I've been manning to scan in some key chapters of Bromley's important
book and put it on the website but haven't got round to it. I will.
I hope Rob will add his insights to this.
Mark
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