Re: (OPE-L) Economic 'Armageddon' Predicted -- by Wall Street economist

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Nov 24 2004 - 18:21:21 EST


At one level, I don't get this argument. The world is on a dollar not
gold standard (as MacKinnon and Davidson have underlined). And as
provider of the only near world money, the US is in obliged increase
the quantity of money to meet the growing international circulation
of commodities. The US Fed is in some ways like the gold sector in
Marx's reproduction schema: it's where the money comes from. The US
therefore runs massive  deficits (i.e. receives gratis real goods and
services), but isn't that just the US' exorbitant privilege as issuer
of (near) world money.

The dollar only has compulsroy circulation in the US

The world need not be permanently on a dollar standard,
it is quite possible that the euro might replace it as
the main reserve currency. Note how much it has appreciated
against the dollar recently.

The continuing us trade deficit increases the chances of
this unless the gains to be had in interest can outweigh the
capital loss of holding dollar assets. Hence Roach's remarks
about the federal reserve having to raise rates.

Without that the ability of the US govt to fund its current
account deficit will be in peril.
about the likelyhood of a ra

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