At 4:19 PM 4/19/95, Peter Grimes wrote:
>I agree with Jozsef that the free-fall of the dollar is worthy of
>investigation by W-S theorists. Presumably elements of the
>global financial community are finding plenty of profits in it,
>and may also be ultimately responsible via their control over
>enormous pension & trust funds. Also, the US govt may be quietly
>pleased with the boost that the fall is giving to sales of US
>exports. But I think that it is premature to view the value of
>the dollar at any given moment as an accurate reflection of the
>degree of US power in the world-economy. US hegemony is indeed
>sliding, and has been doing so for a long time, but its
>relationship with the value of the dollar is indirect, at best.
Why is it indirect? A currency is the most visible symbol of a country's
standing in the world hierarchy. Its value is a function of things like
capital flows, differential productivity growth, and political prestige.
The erosion of the pound's value was a sure sign of British erosion; the
rise of the yen and DM vs. the US$ are pretty good signs of the reduction
of US preemininece (and this holds over the last 25 years, really).
I'm amazed how little the US ruling class seems to care about the dollar's
decline. I'm almost tempted to conclude that their complacency is a sign of
their decadence.
Doug
--Doug Henwood [dhenwood@panix.com] Left Business Observer 250 W 85 St New York NY 10024-3217 USA +1-212-874-4020 voice +1-212-874-3137 fax