My major point about the dollar is that nation-state based
Keynesian analysis -- US runs deficit on current account, needs
to attract foreign capital to finance, economy now vulnerable
to capital flight, financing crunch and speculative attack
on currency -- doesn't apply in the case of the US and
that US uniqueness is not simply a temporary condition nor an
historical accident. My basic argument is as follows:
(1) There exists a global ruling class.
(2) Much of the wealth of this class is accumulated rather than consumed,
so the state of residence of the wealth-holder is not at all relevant -- a
British insurance mogul is not accumulating US stock with the hope of
cashing in
and settling down on the Isle of Wight for retirement,
(3) The US is the hub of the global ruling class and the dollar is the
currency
in which most of them figure. This is becoming more, not less, true as
production and accumulation become more global. All those individual
currencies,with their endless transaction costs and threat of public
control are nothing but a giant pain in the neck anyway.
(4) The US current account deficit doesn't matter to these folks.
It is not a sign gauge of US competitiveness to them. Corporate profits
are the gauge of competitiveness and most of the world's most profitable
corporations are dollar-based corporations.
(5) The little accounting problem represented by the deficit -- the need
for
foreign nationals to hold dollars -- is not a problem in their eyes. As
long as US corporations remain profitable and the US government remains
pro-business, they are happy to hold US assets. Indeed, what else would
they hold?
Argentinian bonds?
(6) Threats to the dollar and ability of the US to finance its deficit
could arise from three sources:
(a) the emergence of a new superpower whose global corporations do
not rapidly become Americanized. Not so very long ago
everyone thought Japan and the yen would take this role, but Japanese
MNC's just merged and forged partnerships with US MNCs. This might
be because the US provides Japan's national "defense"
(b) foreign governments are somehow able to compel their
wealthy to bring the wealth home. This could occur through left wing
coups -- siezing assets; or right-wing coups -- fascistic alliances between
national governments and domestic businesses to rebuild the nation-state.
(c) a left wing political victory in the US. A Nader victory would have
tumbled the dollar.
All three of these seem pretty unlikely to me, at least in the next few
years.
Ellen
>
>
>The tag line "spend it fast as you can" was meant to allude to the line in
>the song, "I don't give a damn about a greenback dollar, spend it fast as
>I
>can" not to any conviction of mine that the demise of the dollar is
>imminent. If... IF... there is a mass dumping of dollars, the
>precipitating
>event will most likely NOT be the fundamentals of the dollar itself. My
>guess is it will probably not even be a "financial" event.
>
>The lack of correlation between current account deficit and value of the
>dollar has nothing to say about future events. In fact, the term
>"correlation" has no more scientific standing with regard to the issue
>than
>do the words to the song I cited.
>
>Tom Walker
>Bowen Island, BC
>604 947 2213
>
