[OPE-L:6121] Re: Re: Re: Re: Re: possible ways out of the 'crisis'?

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Oct 31 2001 - 19:16:31 EST

"Patrick L. Mason" <pmason@garnet.acns.fsu.edu> said: 

> Rakesh:
> Note that the end of my last posting also stated that huge federal deficits 
> are necessary along with lower interest rates. I would also through into 
> the mix tax cuts for the low and moderate income households. Other options 
> may also be necessary.
> peace, patrick

Huge federal deficits without runaway interest rates and credit crunches would 
not be possible in the US, given the total debt situation, if the US did not 
have the political power to coerce the Sa'udis and other Gulf elites to hold 
its (overpriced) Treasuries and to convince the BoJ that it has to do likewise 
if there is to be access to the US market and no retrenchment of the US 
military (see Robert Gilpin, The Challenge of Global Capitalism). At this point 
American Keynesianism is only a euphemism for the IPE theoretic euphemism of 
exploitative hegemonism (David E. Spiro in The Hidden Hand of American 
Hegemony). That is, America can escape the ravages of a global depression by 
Keynesian deficits  only because it can as the lone superpower exercise 
imperial power. As the political scientist Susan Strange put it in Mad Money 
(1998): the US can use "its bargaining power as military protector, or as 
interventionist meddler, or as major trading partner to get its own way and to 
make others undergo the painful adjustments."  American Keynesianism, 
potentially enabled by the inflow of global capital,  may lessen the severity 
of the downturn in the US but it will not stimulate the world economy 
sufficiently to lift it out of the impending global depression. I have 
submitted such an idea here before, Jerry has challenged it, and I welcome his  
restating or adding to his criticism.   

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