Re: Economic reform policy: Some views and proposals

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Warren Mosler wrote:
> --- "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx> wrote:
>
> > Paul is absolutely correct.  Further more, the
> > Mosler/Mitchel/Wray
> > proposal does not deal with the froeign exchange
> > problem.
>
>
> ???  There is not foreign exchange 'problem' apart
> from fixed exchange rate policies, is there?
>
> Also, as per your other post, why would anyone want to
> force an exporter to spend his fx earnings???

Warren, we have been through this before. Under dollar hegemony, fixed
exchange rates require dollar reserves to hold. The Mundell-Fleming
thesis, for which Robert Mundell won the 1999 Nobel Prize,
states that in international finance, a government has the choice
between (1) stable exchange rates, (2) capital mobility and (3) policy
autonomy (full employment/low interest rates, counter-cyclical fiscal
spending, etc). With unregulated global financial markets, a government
can have only two of those three options.

Henry