Date: Wed Jul 21 2004 - 09:00:52 EDT
Rakesh wrote: But if in so regulating credit and the supply of paper money Greenspan succeeds in maintaining the "value" of the dollar as a determinate quantity of a composite commodity, will he not have succeeded in giving the dollar a value as the value of that composite commodity? I am not saying that Greenspan is doing this but that he is being pushed to do this. To maintain the dollar as nearest substitute for world money and the attendant privileges to the US financial sector and the USG, Greenspan has to build confidence that the "value" of the dollar--or rather its equality in physical terms to a composite commodity--will not fall; that in turn means he has to demonstrate that he will and can take the steps to do this (this means that the US has to have the economic and political power to influence other central banks). For example, why else would Greenspan have raised rates with the marginal efficiency of capital remaining quite depressed as indicated by the pile up of cash in corporate coffers. Isn't this an indication that he is trying to preserve the commodity basis of the dollar, the "value" of the dollar as a physical quantity of a composite commodity? Of course he is going slow because some of the price rise of oil may prove to be temporary, and the price of gold has not risen. Claus: As I argued in a previous post, what Greenspan is using in your example is not a composite commodity, but a price index based on a basket of commodities. A composite commodity would be a commodity produced by using as raw materials the three commodities you suggested previously in constant proportions, which is however not what you are saying. As I added, this would be a commodity like any other, hence it wouldn’t introduce a new element into the problem. In the above paragraph I provided an explanation of what you suggest Greenspan is doing, which, I think, can be taken as a valid hypothesis based on Marx’s theory and consistent with a number of previous historical situations. Wouldn’t you agree with this? Claus.
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