Re: [A-List] Michael Hudson's Super-imperialism (euro)

[Hudsonmi@xxxxxxx]

In a message dated 6/23/03 6:57:22 PM Eastern Daylight Time, soncu@xxxxxxxxxxx writes:


> Michael H:
>
> > The US isn't an oil-backed currency (although as long
> > as OPEC holds dollars, this creates a demand for dollars
> > that offsets the US balance-of-payments deficit). It's a
> > military-backed currency, and hence politically backed as
> > an extension of America's military power.
>
> Dear Michael,
>
> It also seems to me that the US dollar is a military-backed
> currency and agree with your observation that "Governments
> rejecting US dollars don't seem to stay in office long, or
> experience assassinations or regime change."
>
> But doesn't this mean also that the attack on Iraq (and
> previously on Yugoslavia) had something to do with the protection
> of the US dollar hegemony? I am not claiming that the main
> objective of the Iraq war was "to prevent the Euro from becoming
> a threat to the dollar" but shouldn't it be unfair to dismiss
> that the possibility of euro becoming a threat in the future also
> played some role?
>
> Also, what do you think about recent reports that Indonesia is
> considering the use of the euro for Indonesia's foreign-exchange
> reserves? Isn't (Wouldn't) this (be) a call for punishment by
> Indonesia, if Indonesia really means what it says? Do you think
> they are serious or is this just a bluff of some kind?
>
> As I recall, there were also some attempts to build an Asian
> currency, although they did not go anywhere. As long as no body
> is capable of challenging the US militarily, no body has the
> ability to pose a serious threat to the US dollar but how long do
> you think that could last?
>
> By the way, after much difficulty with Amazon, I received a copy
> of your book from Barnes and Noble a few days ago and it looks
> very interesting after skimming it through very quickly. I wish
> we were able to time this seminar differently so that I could
> participate in the discussions but unfortunately I will be away
> from the internet for about six weeks starting from this Friday.
> I will have your book with me though and hope to finish reading
> it by the time I am back.
>
> Best,
>
> Sabri


Dear Sabri,
       Earlier today, William wrote me off-list with almost the same questions. So I guess they follow from the line of analysis we're developing.
       Your concerns about the euro threatening the dollar are, in my view, overdrawn.
       Suppose that the oil countries DID shift into euros. This would, as you point out, force up the euro's exchange rate against the dollar.
       The US wouldn't mind a bit. This would help exporters.      
       European exporters would scream -- their currency was being priced out of the market.
       The dilemma is all spelled out in the final two chapters of Super Imperialism. Europeans would GET OPEC currency, and then decide to buy Treasury bills with these dollars THEMSELVES, so as to hold down the euro's exchange rates.
       The only REAL response is to have two rates -- a trade rate and a capital movement rate. That's the REAL way to counter things. And that isn't even being discussed!
       I hope this helps.
       Michael