Re: [Marxism] US Risks A Downhill Dollar Disaster

[John Enyang <x03002f@xxxxxxxxxxxxxxxxxxx>]

This seems to miss the point. Nixon not only devalued the dollar, but
crucially ended dollar/gold convertibility while strong--arming the
Europeans and the Japanese into accepting the USD as global reserve
currency. Thus the main competitors of the US in Europe and Asia would
financing US deficits ie., consumption.

>From the point of the US state, more important that fluctuations in the
value of the US dollar, is the that the rest of the world continue to
accept pieces of paper printed by the US Federal Reserve Bank as reserve
currency.

Also, contrary to what is implied below, a dollar devaluation will not
make Chinese exports any more expensive, as long as the yuan remains
pegged at a fixed rate to the US dollar -- on the contrary, a devaluation
of the USD will make Chinese exports more competitive under these
circumstances.

On Wed, 24 Nov 2004, Tom O'Lincoln wrote:

> >>A disaster for whom? The extract below seems to suggest that it is
> European Capital<<
>
> That was my thought too. All things being equal (which they never are,
> of course) a falling USD should boost US exports and cut imports from
> Europe(and Asia - the Chinese won't like it). The article seems to be
> saying that Bush wants to use a weaker dollar as a bludgeon against
> competition, much as Nixon did in the early seventies.
>
> But there are always downsides. All things being equal, it will cause
> domestic inflation. To the extent it does damage other economies, it can
> slow global growth or even bring on recession, which would rebound on
> the US,
>




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