Why Greenspan can cut interest rates

[Chris Burford <cburford@xxxxxxxxxx>]

I had meant to come back to Rob on his post of 7th December


> Thought-provoking post, Chris!  (Although
> I doubt you'll have convinced
> Dennis)  I've been speculating Greenspan could quite soon reach a
> point
> where cutting interest rates would not be an available option (coz
> he
> couldn't afford all those helpful foreigners getting out of
> dollars).  That
> caught no-one's attention, and I'm beginning to suspect there's
> something
> about the greenback's power I don't understand.  


Greenspan of course has to calculate. But he has a significant wider
margin of error than Duisenberg and always will, because of the uneven
accumulation of capital on a world scale. That is what makes the
qualitative difference, even though arithmetically it is quite
marginal.

Because in any recession under capitalism, and the productive forces of
the world are operating far below their capacity, the rate limiting
factor is the limited purchasing power of the masses. So long as the US
economy has a relative advantage, which it does through a number of
factors, through shaking off the challenge to its technical lead, through
its plentiful supply of cheap labour, through the luxury of being able to
circulate its money throughout the world, at a cost borne by other
countries, not itself, then the USA will be gratefully seen as 

the purchaser of last resort.

So if the US is thinking of reducing interest rates, Duisenberg with a
more sluggish European economy, will be delighted to lower interest rates
too. The announcement will be made in bland, calming terms to suggest
this is all part of a wise consensus to manage the global system. Which
it is. The global system of capitalism, one of whose absolute laws, as
Marx emphasised in Volume I, is the uneven accumulation of capital.

Comments and criticisms appreciated.

Chris Burford

London