Subject: Re: AUT: Re: Re: Re: Kevin on Iraq
From: chris wright <cwright.21stcentury-AT-rcn.com>
Date: 02 Apr 2003 23:10:13 -0600


Hey Harald,

> 
> You do not seem to have gotten my point here, Chris. Nor
> Griswold's for that, as far I can see. But I let the  later be here.

Maybe, maybe.  I am really trying to grasp all this more carefully, and
so I am throwing out stuff and enjoying the corrections, as they are
helpful.
 
> One of  the claims in Angyal Istvan article, expressed through
> citing from a piece written by George Monbiot in the
> Guardian, was:  "The dollars' dominance of world trade,
> particularly the oil market, is all that permits the US Treasury
> to sustain the nation's massive deficit, as it can print
> inflation-free money for global circulation. "

Before I comment, looking back at it, I agree that I would not say that
the dollar's dominance is 'all' that permits the massive deficit. 
However, I think it is a part of it.

So I am going to punch out some more stuff from Henwood's book for us to
chew on.

p. 46  "Around 83% of all trades in the 1995 survey involved the US
dollar.  While this is down from 90% three years earlier, its evidence
that the dollar is still the dominant world currency by far; even
something as decentered as the FX market needs a fixed referent.  Part
of this dominance, however, is the result of "vehicle trading" - the
practice of using the dollar as an intermediary currency.  Instead of
someone who wants to buy iire for D-Marks waiting to find someone eager
to sell D-marks for lire, the trader exchanges D-marks for dollars, and
then dollars for lire.  The dollar is also the world's main reserve
currency - according to the IMF, 59% of the world foreign exchange
reserves were held in dollars in 1996, up from 1990's low of 50%."

But then he says, and this is relevant too: "As the European Union moves
towards its single currency, the euro is likely to account for a larger
share of the world's reserve and vehicle currency.  Loss of the dollar's
central role would decrease demand for the greenback, and would probably
nudge up US interest rates, and maybe even spell the end of the US's
imperial privilege of borrowing in its own currency."

btw, I use Henwood not because he is "orthodox", but because I feel that
he has a strong grasp of the money matters in a practical way.  I do not
know what he would think about this, but I just joined the Left Business
Observer e-mail list to find out...

> Now if it is so, and that is what official sources say, that Australia's
> deficit has been even larger -- and in this context it is of course
> percentages that matters -- then it would be very hard to see how
> the just mentioned claim in the Istvan article could be true. For the
> Australian dollar certainly does not uphold the same "dominance
> of world trade, particularly the oil market".
>         To put it in even clearer: The truth of of Austrlian deficit
> points to the falisity of the claim that: "The dollars' dominance
> of world trade, particularly the oil market, is all that permits
> the US Treasury to sustain the nation's massive deficit,
> as it can print inflation-free money for global circulation "
 
One thing that mainstream economists tend to place a lot on is the
relationship between 'domestic' debt and 'foreign' debt.  Is Australia
saddled wth the same amount of foreign debt?  What about its trade
balances?  I am genuninely not sure and it seems that this might
actually be relevant to the issue of money, which for all of its
internationalism in movement, is still somewhat "nationalistic" relative
to capital.

Anyway, thanks for the response, I think it made things clearer.  Not
sure if I agree, but I think I get the point.  I think.

In either case, I do agree that the weight of the dollar vs. euro should
not be overestimated, but seen as part and parcel of a struggle over
accumulation and the terms of accumulation, ie of exploitation.  Who
will be in a better position to draw capital to them and how...

Cheers,
Chris



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