Reply Sun 29 Mar, 2009 12:43 pm
@High Seas,
high seas :
sorry for skipping from your mention of dr. mundell to the economist without crosschecking .

The value of the USD will be greatly harmed in any event if these proposed reforms of the domestic or international monetary system proceed.

there seem to be many economists - american and other - who believe that the value of the U.S. dollar cannot be maintained against the other currencies of the world forever .
quite a few are of the opinion that inflation in the U.S. cannot be avoided and will result in a fall of the U.S. dollar - the question seems to be : when and by how much .

btw the former governor of the bank of canada (david dodge) , stated last week that he expects canada to have an inflationary period immediately following the end of the recesion - which seems to get pushed farther away - a/t his comments it might take until 2011 to get canada's economy to turn around .
that has been the usual cycle "in the past " : canada's downturn occurs several months after the U.S. downturn but it also takes canada longer to recover than the U.S.

comments from canada's prime minister :


“We will not turn the corner on this global recession until the American financial sector crisis is fixed,” Harper told a business audience in Brampton, Ont. “Our stimulus plan will help us to sustain economic activity and make transitions but it cannot fix the problem of the global financial system.”
Reply Sun 29 Mar, 2009 01:06 pm
there seem to be many economists - american and other - who believe that the value of the U.S. dollar cannot be maintained against the other currencies of the world forever .

Inflation of the dollar and turmoil on the global debt markets as America attempts to float this massive debt is a given. What I am interested in at the moment is the claim that America can not float this debt even in the near term, that it will cause a whole new round of global financial collapse with in the next few years. This could either happen as the US sucks so much of the wealth that the rest of the world does not have enough to operate, or because the bond sales either fail to draw bids or the bids are far more than America was planning to pay thus proving the america crisis managment plan to be failure which will require a new plan. In any of these outcomes the global financial system collapses some more. In most of them the political turmoil also increases.
Reply Sun 29 Mar, 2009 02:41 pm
hawkeye :

i certainly do not have an answer to your question.

all i can offer you are some comments made by david dodge - former governor of the bank of canada - at a recent economic conference in toronto .
his advantage is that , not being a politician , he doesn't have to stand for election and face the furor of the citizens - who probably don't enjoy taking any bitter tasting medicine .


Global fix will take years, Dodge cautions

'Even if everything is done right,' former Bank of Canada governor says full recovery might not happen until 2011 or beyond
March 25, 2009

It will take years and a fundamental reordering of international trade and consumption patterns to fix the flaws that prompted the worldwide financial meltdown, former Bank of Canada governor David Dodge said yesterday.
While the actions currently being taken by governments around the world will help turn things around eventually, they will take time to have an impact, "even if everything is done right," Mr. Dodge said at an economic conference in Toronto.

While there should be a global rebound beginning in 2010, "it is likely to be considerably slower than in previous times, and it's going to be well into 2011, 2012 and 2013 before we see the level of output and the rates of growth return to something approaching capacity," he said.
The key to fixing the economic world over the long term is to eliminate the huge trade imbalances that see countries in Asia exporting far more products than they consume, while the United States consumes more than it produces.

That fundamental problem will take many years to redress, Mr. Dodge said.

It will also require an enormous amount of political will in various countries to make it happen, he added. For instance, the United States would likely have to take measures such as raising consumption taxes, something that would be politically unpalatable, Mr. Dodge said.

Another speaker at the conference, Nomura Research Institute's chief economist Richard Koo, noted that Japan's long recession that started in the early 1990s would have been much worse had it not been for the massive stimulus from the government.
In his presentation, Mr. Dodge offered a prescription for repairing the damaged international financial system. Among his recommendations: All financial institutions should be forced to build up their reserves during good times, and executive compensation should be based on profit after reserves are taken into account.

He also recommended much greater standardization of derivative products, more transparency in credit rating systems, better oversight of mortgages, and stronger regulation of credit default swaps.

link to article :

btw canada already has a consumption tax : the much hated GST (but necessary imo) and most provinces have an additional sales tax .

0 Replies
High Seas
Reply Mon 30 Mar, 2009 07:54 am
Exactly the point made by the Chinese central bank governor - and Mr. Dodge: anyone now holding dollars risks seeing his holdings depreciate considerably, since new dollars are created a trillion at a time thanks to idiotic policies of our new government.

There's nothing to sop up the new liquidity except for a massive drop in velocity of circulation - aka a world depression. Agreed about 2011 next upswing.
0 Replies
Walter Hinteler
Reply Fri 10 Jul, 2009 01:19 am
At first China and Russia rushed ahead, now the French (Sarkozy) join this club:

Sarkozy calls for talks on dollar

"We need to ask the question: shouldn't a world that is politically multi-polar correspond to a multi-monetary world economically?" he said in a news conference during a summit of world leaders in L'Aquila, Italy.

Sarkozy compared an overhaul of the global currency system to the enlargement of the Group of Eight structure to encompass fast-growing emerging economies, which were invited to join the Italian summit.

He said the supremacy of the dollar belongs to the post-Second World War era when America was the predominant world power both economically and politically.

"Even if it's a difficult topic, I hope that in the coming months we will talk about currencies and the international monetary system," he said. "There has to be a debate."
High Seas
Reply Fri 10 Jul, 2009 11:26 am
@Walter Hinteler,
Sarkozy is only following the great French tradition dating back at least to Colbert, more recently to Gen. de Gaulle. The main worry here isn't France, it's those other guys out East:

0 Replies

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