Re: [A-List] US economy: Soros vs. dollar

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

Louise (interesting to see you participating directly),
      I do fear that you are right that there will be reactions
of such sorts.  But there may be a lag long enough for
Bush to get at least a short term boost to US growth,
enough for him to get his early 2004 uptick that is all
he cares about for his reelection. What could really
mess with all this is if the dollar suddenly starts to plunge
hard, something not out of the question at all, given the
general fragility and instability of the system.  OTOH,
I read that the Japanese have been intervening in the
markets to slow the dollar's decline.  A number of
observers have argued that as a way to get out of their
liquidity trap, the Japanese should be devaluing the yen.
This situation could easily get very much out of hand
all the way around, especially given the massive scale
of the US current account deficits and its accumulating
net indebtedness.
Barkley Rosser
----- Original Message -----
From: "paul davidson" <pdavidson@xxxxxxx>
To: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Thursday, May 22, 2003 10:19 AM
Subject: Re: [A-List] US economy: Soros vs. dollar


> At 02:48 PM 5/21/03 , you wrote:
> >.  That this is going to be done by Robinsonian
> >"beggar thy neighbor policies" does not matter to this crowd
> >(and I just saw a report forecasting that a 20% decline of the
> >dollar would boost US GDP growth in 2004 by 1.5%, probably
> >enough to do the trick).
> >Barkley Rosser
> .
>
> Unfortunately another 20 per cent decline in the US dollar may be enough
to
> set off a world wide depression  as others adopt beggear their neighbor
> policies and the central banks of the world see a huge decline in the
asset
> side of their balance sheets (their foreign reserve account) when
> translated into their local currency -- and then their will be little or
> not growth in employment in the US export industries.
> Louise Davidson
> Editorial Office Manager
> JOURNAL OF POST KEYNESIAN ECONOMICS
> SMC 501
> Department of Economics
> University of Tennessee
> Knoxville, Tennessee 37996-0550
> phone: (865) 974-4221
> fax: (865) 974-1686
>