Henry for Asian Crisis

Xxxx Xxxxxx xxxxxxxxxx at xxxxxxxxxxxxx.xxx
Fri Feb 16 12:51:29 MST 2001

  Henry, since you have followed the Asian crisis very closely, I need to ask
some basic questions to you (which I will have to incorporate in my proposal
immediately. Hopefully today!!)   Although I know the excess capacity problem of
Asian economies, I have some problems with what had exactly happened on the
*surface*  of financial markets--politics of money etc..   1) Was the cause of
the crisis inflation or deflation?  ( I need this to compare it with the 1970s
recession, which was driven by the inflationary pressures of  the US dollar and
postwar economic growth. The prices were rising in the 1971 crisis more than the
volume of material production. Nixon's devalued dollar to set off the
inflationary devaluation of the dollar.. So the measures taken to cope with the
crisis were anti-inflationary in character. Deflation was not expected because
prices continued to rise even after Nixon's  attempt to control money supply  
What about the Asian crisis? were the prices rising or falling? )   2) Asian
currencies were pegged to dollar by several US agreements (Plaza). When the
dollad gained value in the 1990s,  the pegged local currencies were
automatically overvalued-- increase in the face value of currency more than its
worth-- and made Asian exports less competitive in international markets.  Asian
economies responded to the crisis with some combination of currency devaluation
(to cheapen their exports) and cuts in imports. Isn't this similar to Nixon's
strategy above?   I will be very glad if you clarify some of the issues.   Hugs
  Xxxx   --- Xxxx Xxxxx Xxxxxx Ph.D Student Department of Political Science SUNY
at Albany Nelson A. Rockefeller College 135 Western Ave.; Milne 102 Albany, NY

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