Plus a superb article on CNN:
http://www.bloomberg.com/news/2012-02-03/expect-china-to-shape-next-bretton-woods-pact-commentary-by-philip-coggan.html
The following is a copy of my e-mail to the author:
<<<<
Dear Mr Coggan,
I thought your "Expect China . . ." article (as on Bloomberg website)
to be a first-class contribution to the currency debate, ranking
alongside Robert Zoellick's Financial Times op-ed of November 2010. I
much look forward to reading Paper Promises.
I would dispute two points in your last paragraph, however, The UK
didn't "set the terms of the gold standard". Gold looked after
itself and the UK had to accept the value of gold as a given (that
is, as the ultimate consumer status good in which there was a free
market). The UK was the first country to develop the banking
mechanisms by which medieval gold coins were able to become the basis
of a credit system and rate of economic growth never experienced
before. (The irony is that most of the wrinkles had been ironed out
when the Great War came along!)
I would also dispute that China will set the terms for the next world
financial system. If China continues as it has done for the last 30
years, it will probably be able to manufacture the cheapest and
largest range of consumer goods for the whole of the world (within
resource and other important constraints) in the next 30. However,
it is highly likely that America (alongside Germany, the UK and a
fast-rising Israel) will retain its overwhelming predominance in
fundamental scientific research. The evidence so far is that China
(like Japan and South Korea before it), although able to get up to
the leading edge in one technology after another (by copying), is
signally unable to develop brand new business sectors. (This is
undoubtedly due to its authoritarian culture but this won't change
anytime soon. However, Chinese, Japanese and South Korean researchers
are highly innovative when in an American or UK setting.)
In short, China and America will need each other in 30 years' or a
century's time as much as they do now. As you will know, China,
together with Russia and one or two more, has been calling for a new
world trading currency for several years now. America has repeatedly
sent it away with a flea in its ear. But the smart pants in the US
Treasury must have realized by now that Nixon's decision in 1971
wrecked the financial system forever and that a new one is
inevitable. So why is America delaying?
That, to my mind, is the most intriguing question of all.
Once again, thank you for a superb start to my week-end. I must now
hastily send this off and click through to Amazon.
Yours sincerely,
Keith Hudson
>>>>
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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