Re: [A-List] US imperialism: dollar hegemony

["Anne Williamson" <annewilliamson@xxxxxxx>]

Nice to see a representative of our imperial state write the
truth about fiat dollars and the worldwide looting system they
effect; however, the answer does not lie in allocating to these
grotesque, reptillian monsters (US foreign policy establishment and
its unholy alliance with the banksters) the opportunity to
foist more fiat crumbs (and mad economic schemes involving
debt merchandising) at the Third World. -A.

----- Original Message -----
From: Keaney Michael <Michael.Keaney@xxxxxx>
To: A-List (E-mail) <a-list@xxxxxxxxxxxxxxxxxxx>
Sent: Monday, April 08, 2002 9:50 AM
Subject: [A-List] US imperialism: dollar hegemony


LETTERS TO THE EDITOR: US dollars circulating abroad put aid in another
perspective
Financial Times; Apr 3, 2002
By PIETER BOTTELIER

>From Mr Pieter Bottelier.

Sir, The recent UN Conference on Financing for Development in Monterrey,
Mexico, failed by a large margin to achieve secretary-general Kofi Annan's
objective of doubling available funds. There is no question that current and
pledged aid is totally inadequate in relation to the needs of poor
countries.

The US government can and should do more. Globalisation should work for
development in poor countries, not against it.

This requires a rethinking of trade and aid policies. The US remains too
protectionist, particularly over agricultural imports from poor countries.
The aid budget is so small, in absolute and relative terms, that the US is
unable to provide leadership in this crucial area. The US spends Dollars
10bn, or about 0.1 per cent of gross national product, on development
assistance, less than a third of the European Union and Japan. Even when the
additional Dollars 5bn over three years promised by President George W. Bush
is added, the US remains at the bottom of the pile of donor countries while
the share of Federal budget funds allocated to development aid, a little
over half of 1 per cent, remains as low as it ever has been since the second
world war.

The US derives significant financial benefits from the massive circulation
of US currency abroad. According to a joint study by the US Treasury
Department and the Federal Reserve, an estimated 50-70 per cent of the total
amount of US currency outstanding circulates outside the US. As long as the
US has large current account deficits, those dollars also serve to help
finance the deficit.

It is a very attractive way of deficit financing, because the US Treasury
pays no interest on that component of the country's external debt. Moreover,
if those dollars are not eventually spent in the US or exchanged for
Treasury bonds, the debt is never repaid. No other country enjoys such
financial windfalls. How large are the financial benefits for the US?

If we calculate US currency outside the country at 60 per cent of the total
outstanding (a little over Dollars 643bn at the end of 2001), this portion
of US external debt amounts to Dollars 400bn. The amount of the interest
savings accruing to the US varies with the rate of interest. The lower end
of the range could be put at 1.8 per cent (current rate for three-month
Treasuries) and the higher at 4.8 per cent (current rate on five-year
Treasuries). Therefore, interest savings accruing to the US may be estimated
at somewhere between Dollars 7.2bn and Dollars 19.2bn, or 70-190 per cent of
the current US development budget. Since the larger part of the dollars
overseas circulate in developing countries, one could argue that the group
in effect pays for half or more of the aid received from the US by using
dollars.

Far from suggesting that those countries should be entitled to compensation
from the US, the argument does put the very modest financial contribution of
the US into sharper perspective.

Pieter Bottelier, Paul H. Nitze School of Advanced International Studies,
Washington, DC 20036, US

Full article at:
http://globalarchive.ft.com/globalarchive/article.html?id=020403001619&query
=Pieter+Bottelier

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx