Notícias

Anon,What you are saying is some sort of aremngearnt which may replicate a currency clearing union or probably a better version, though I haven't looked at the latter carefully. In your idea, are the swaps independent of the present Chinese holding of US Treasuries ? I am a bit open to the idea on these lines currency union etc. Bill may dismiss them, but my point to him will be that he may have gone through a stage of research to dismiss that, so let me also go into that path. I am empathetic to the Modern Money idea that the government runs runs a huge debt and there is no limit and one can keep importing. The current account deficit widens and the fiscal deficit will also widen and so what etc. So there seems to be no limit from the monetary perspective. However, the external sector has other dollar-denominated assets as well such as equities, corporate bonds and mortgage backed securities and the question is what about the rates with which such numbers grow? If a stock is held by a household, the dividend goes to it and the household may consume a part of it and it flows back to the producer. If the external sector holds the stock, it just goes to it and doesn't flow back to the domestic sector. The US government can increase its fiscal stance but what if all the expansion goes to the external sector ? In other words, there is a scenario in which the fiscal expansion improves short term demand, but doesn't do much in the long term. (for countries such as the US with a huge external debt, though denominated in the local currency)If the dollar devalues because of market forces, the position of various domestic sectors of the US improves because the values of their external assets increases. They export more as well and this increases demand as well. However, the US dollar has been artificially high or one can say that the others have pegged theirs to lower values. The manufacturers in the US have great production capacity and products, are competitive and have good selling skills. In spite of this, manufacturing has weakened a lot in the US. The answer to why this has happened may only be in the monetary economics related to the external sector. One can say that the US government should have just increased the fiscal deficit but that would have increased the trade deficit who wins the race ?So I will be interested in the things you are thinking. The currency aremngearnts in the Euro Zone have failed, but thats due to a fixed exchange rate. There could be some monetary aremngearnt with variable exchange rates through a clearinghouse of some sorts where the external sector can be tracked with less difficulty and fiscal policy or anything related to fiat currency is not sacrificed. If you don't mind your idea is a gold standard without the gold and I am actually searching for something of that sort.