[Marxism] Interesting Article on Dollar Collapse in WSJ

S. Artesian sartesian at earthlink.net
Fri Oct 9 09:19:51 MDT 2009

Today's WSJ has this front page story:  US Stands By as Dollar Falls

" The dollar fell to a 14 month  low against other currencies Thursday, 
intensifying a trend  that the Obama administration has publicly suggested 
it opposes-- but which it appears prepared to tolerate quietly.

Many of America's trading partners, however are pushing the other way.  In 
Asia, traders said central banks in South Korea, Taiwan, the Philippines, 
Thailand, Indonesia, and Hong Kong intervened to slow the dollar's fall 
against their currencies.

Asian officials fear that the dollar's fall could crimp their export-driven 

In Europe, where the strength of the euro is clouding the prospects for 
economic growth, the president of the European Central Bank, Jean-Claude 
Trichet, said Thursday that the stated US 'strong dollar policy' is 
extremely important in present circumstances."

Indeed it might be-- to Europe and Asia, but not to the US which sees in the 
depreciation a tariff by another name and one more plus in the game of 
beggar thy neighbor.

But IMO there is more to this than "just" trade war and increased 
competition for decreased profits-- and I hasten to add, that I think there 
is "more," does not mean the bourgeoisie are conscious of the more, intend 
the more, or have designed a policy to implement the more.

And the more is... through dollar depreciation we get increased pressure on 
exporting countries and we get MORE:  1) we get effective devaluation of the 
face value of the debt securities being held by other governments.  And with 
effective devaluation of the debt plus increased pressure on world trade, 
and major exporting countries, we get MORE: 2) we get increased pressure on 
China to revalue the yuan-- we get that pressure on China from exporting 
countries who ME TOO the tariff by another name and we get MORE 3) we get 
with the pressure for revaluation upward of the yuan, intensified pressure 
to make the yuan fully convertible.  And once we get a fully convertible 
yuan, we get MORE, much more I think than the Chinese have bargained for 4) 
we get effective collapse of China's controls on the movement of capital in 
and out of the country 5) we get effective collapse of China's ability to 
maintain a trading range for the yuan  6) we get the futility of China 
intervening in markets to attempt to maintain the value of the yuan by 
buying dollars in the markets, and we get MORE 7) we get the currency 
traders, the funds with huge dollar resources, resources estimated by the 
Financial Times to vastly exceed the combined dollar reserves of Asian and 
European central bankers, and then we get the MORE that is really the less 
8) we get the currency traders whipsawing the yuan through the currency 
markets, up and down, we get, in response to the whipsawing of the yuan, and 
the deterioration of capital controls, capital flight, "repatriation" of 
"profits,"  and their redistribution by the currency markets, and we get 
these markets doing to China what they did to South Korea, Indonesia, 
Thailand, Taiwan, Singapore, the Philippines in 1996-1997-- bringing the 
crescendo of overproduction, the tutti of fixed asset investment to a 
crashing halt.

PS.  This is not being defeatist.  I am convinced that this scenario will 
both precede and remain coincident with tremendous upsurge of class struggle 
in China, as the millions of unemployed, the rural and urban poor, the 
workers in the major industries,  take direct, and expropriatory actions.

And then again, I might be wrong about everything.

More information about the Marxism mailing list