Re: [OPE-L] The US Current Account Deficit under the Floating Dollar Standard

From: Anders Ekeland (anders.ekeland@ONLINE.NO)
Date: Fri Dec 03 2004 - 05:34:55 EST

I am certainly not an expert in this area, but my gut feeling that the
Serrano article is a bit one sided, or more precisely too deterministic.

I buy all his arguments, but I think he overlooks the problem of stability.
That the US-elites can live with this way of financing debt for a long time
is an established fact. But will the rest of the world pay the bill eternally?

Russia, Japan, China and the EU might want - at some point - to stop this.
Putin already mentioned having Euro as the oil currency.

The other great powers both need and do not need the present dollar regime.
This means that stochastic disturbances, can change this radically,
overnigh. A major US defeat in the Middle-East for example. Or the "others"
deciding to side with Iran and/or Saudi regimes to avoid US of getting full
control over a major part of the worlds oil reserves.

A lot of things might happen. The problem is "game theoretic", i.e. there
are many factors, many dynamic processes interacting, hence many solutions.
This becomes as difficult as weather forecasting, in reality worse, since
we have free, intentional, non-deterministic actors. We might see a change
from USD to Euro as an alternative currency for trade. This would force US
to some adjustments.

But why is this dollar-debt financing question interesting? Are we hoping
that such a crash would change peoples view on the capitalist system? Are
we giving advice to Wall Street or European governments, or to the union

Just my 2 cents

Anders Ekeland

At 01:55 03.12.2004, you wrote:
>More on the consequences of the dollar having replaced the gold
>standard. As far as I know, Anwar Shaikh, Fred Moseley and others
>have not responded to this kind of analysis. I pointed to this kind
>of analysis in the piece I wrote about Mattick for the International
>Journal of Political Economy.

The US Current Account Deficit under the Floating Dollar Standard #
Franklin Serrano *

In recent years, the current account deficit of the American economy
has been growing sharply, reaching five per cent of its GDP in 2002.
Along with the deficit, there has also been a marked increase in the
number of heterodox economists who believe that the American foreign
debt ("the biggest in the world") is becoming unsustainable. These
include some Marxists (Giovani Arrighi, Anwar Shaikh, Jayati Ghosh....
..... (cut)

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