Bounced from Nestor #2

Louis Proyect lnp3 at
Sun Nov 21 07:30:36 MST 1999

> Also, exchange rates aren't unimportant over time. They
> bounce around, but ultimately they do follow long-term
> productivity trends. The dollar was way, way overvalued
> from 1980-85, but it took five years for economic reality
> to set in.

This used to be true in the past, but it is not so much
true today. The increasingly growing power of the financial
sector, that modern Leviathan, has made it possible that
awkward events take place. Take Argentina, for instance,
which is subject to a false exchange rate (1 peso = 1
dollar) since 1991. This exchange rate has been one of the
two main levers in the task of destruction of the country
that neoliberals have accomplished. The other one is the
foreign debt. Since in order to sustain the exchange rate
Argentina must keep contracting foreign debt while at the
same time its industrial sector is dismantled, its public
sector is given to foreign ownership and control as a gift,
its working class is crushed and reduced to impotence, and
so on, the schema can keep working on while there is enough
money on the financial scene.

This has brought about many ridiculous results, when
comparing our different GDPs along time, and still more
ridiculous ones when doing inter-country comparisons.
Perhaps the PPP GDP is an efficient tool.


Louis Proyect
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