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