Re: Fed and the former axis powers

[BMCFARLING@xxxxxxxxxxxxxx]

On Fri, 08 Jul 1994 08:47:19 -06, Doug Henwood queried:
> 1) In an unquoted response to my dollar polemic, Randy Wray argued that
> the falling dollar will improve US exports, and that our wages are low
> relative to Germany and Japan. Why is it the axis powers remain
> formidable manufacturers despite appreciating currencies and rising real
> wages, but the US has to resort to dollar depreciation and falling real
> wages in an effort to stay competitive?

And answered the query later: (edited to modify meaning!)
> [In the U.S.] bondholders [successfully] demand slower growth and higher
> unemployment[.]

     While in Japan bondholders are not allowed to run things, since this
is perceived as running counter to the interest of the corporate elites.

Query 2:

> 2) Stupidity driving the Fed? I'm always deeply suspicious of arguments
> that what used to be called the ruling class doesn't understand its own
> interests as well as a bunch of marginalized critics. Is it stupidity or
> self-interest that drives bondholders to demand slower growth and higher
> unemployment?

     Bondholders: self interest (but not *enlightened* self interest).
     The Fed: being trapped in a worldview in which it makes sense to cater
to bondholders seld-interest -- which may not be stupidity, but is
certainly not farsighted intelligence, either.

Virtually,

Bruce McFarling, Pellissippi State
bmcfarling@xxxxxxxxxxxxxx (through July 1)