Re; Danby Seminar

["Bruce R. McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>]

>To Bruce's stimulating questions:
>
>>1) How would we expect countries to sort out in terms of
>>facing export demand constraints on growth on the one hand
>>and facing challenges due to international liquidity constraints
>>on the other? Does either tend to reinforce the other, for
>>example?
>
>Following Machlup, I'd prefer not to use the term "international
>liquidity constraint" for a whole country.  Individual actors with their
>own balance sheets (including the central bank when foreign payments are
>at issue) may face liquidity contraints but I don't see how the term has
>meaning for a financial system, because any number greater than one of
>actors can create liquidity among themselves.  (Am I quibbling on an
>uninteresting definitional point?  I *think* this is an important
>distinction for theory and tried to so argue in the paper.)

	I don't think this is a quibble, but this is why I write
the long-winded 'a country facing challanges due to international
liquidity constraints', rather than 'a country facing an
international liquidity constraint'.  If it wasn't long-winded
*enough*, edit it to say 'the range of international liquidity
constraints faced by its nationals'.

	However, the point is important *not* because any group
within the country can create liquidity within itself -- it can
only create a form a *local* liquidity.   Rather, it is important
because different groups within the country face different obtsacles
(in both severity and type) in forming groups with foreign individuals
to create international liquidity.

Virtually,

Bruce McFarling, Newcastle, NSW
ecbm@xxxxxxxxxxxxxxxxxxx