[Marxism] IMF style austerity in the works for the USA?

S. Artesian sartesian at earthlink.net
Fri Oct 16 13:49:30 MDT 2009


We need to counterpose a bit of clarity to the "dollar is dead, or dying" 
and governments are getting close to abandoning its in favor of the...." 
sing along that Fisk and others are flogging.

First point of clarity:  governments do NOT and cannot control currency 
exchange markets.  Central bank reserves of the world's largest central 
banks combined do not approach the currency reserves of the private 
speculators, traders, funds, investment, mercantile, commercial banks making 
and trading in those markets.  And while those private sources trade the 
dollar down, central bankers continue to purchase dollar-denominated 
instruments for holding reserves.

Why do the central banks do this?  Because there is no alternative.  Because 
there is no market as huge, as liquid, as accessible as the market for US 
Treasury instruments.

Second point of clarity:  the movement away from the dollar and into other 
currencies is not a vote on the future of the US economy; is not an index to 
the "cracking" of the facade of US primacy; and certainly does not occur in 
isolation.

The movement away from the dollar by those same funds, traders, etc. is part 
of the general "relaxation," the sigh of relief and hope that the worst is 
over,  and a return to "RISK" as a way to generate some actual RETURNS.

The movement away from the dollar is part of a trend, process, dynamic that 
has driven up prices and volumes in the stock exchanges of the US, the 
developed countries, and emerging markets.

The movement away from the dollar is part of the trend that has seen 
increases in aluminum prices despite immense overproduction, improvement in 
steel prices, oil cracking $70/barrel, the issuance of huge amounts of 
corporate debt snapped up in the bond markets, the rise in gold prices, etc. 
etc.

The trading in the markets is being fed by streams of liquidity moving out 
of the safety of government guaranteed programs and issues; other streams of 
liquidity provided directly to banks and traders by governments, bankers and 
traders who, while more than happy to borrow from the Fed or the Treasury at 
zero interest rates, will not invest in Fed or Treasury instruments that do 
not offer enough return, or enough return to offset the risks in the 
instrument itself [i.e. FNMA, FMAC security issues].

Those who think the flight from the dollar indicates the weakness of US 
capitalism, the loss of the dollar's centrality to capitalist exchanges, are 
making an equal and opposite mistake to those who not so long ago saw the 
soaring price of oil as an index to the approaching post "peak" production 
era, and the soon to disappear supplies of oil.  In the case of oil, there 
was the confusion of use-value with exchange value.  In the case of the 
dollar, there is confusion of money as a store of value and a means of 
circulation, with its, money's own need, to function as "capital"-- seeking 
out profit, an expansion of value.

I don't doubt that there is austerity in the works for the US.  Hell, it's 
already here-- all the stimulus money hasn't done anything to expand 
employment-- its stated goal;  the attack on wage growth and wages is 
accelerating; state cutback in Medicare and Medicaid will continue, as will 
diminished funding for  public education, etc.   But that austerity has 
nothing to do with the market trading valuation of the dollar.







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