[ExI] Australian dollar

BillK pharos at gmail.com
Thu Nov 4 16:54:40 UTC 2010


On Thu, Nov 4, 2010 at 1:39 PM, Dan  wrote:
> Imports themselves are not to blame. Also, recall the context of my statement
> here: BillK wrote, "Currency devaluation has many bad consequences, of course,
> as well as the good consequences of possibly increasing exports and reducing
> imports."
>
> He's, obviously, here pointing to an upside to currency devaluation. I was
> questioning whether this was really an upside after all. What's wrong, after
> all, with imports? They're a sign of trade -- that people somewhere else want to
> sell stuff to you. This is usually a great thing -- it spreads the division of
> labor ever further -- making for greater efficiency in production -- and usually
> provides you with more things to choose from.
>

I agree that trade is good. But I was writing in the context of the
huge US deficit funding. The US specifically needs to get the import /
export trade back in balance.


> We are not "spending ourselves to a brutal catastrophe." The US government is.
> If you're worried about spending being too high (by whose reckoning?), then the
> thing to do is stop government-sponsored credit expansion. Also, stop government
> debt-financing -- which is one of the main drivers of credit policy (credit
> expansion allows big debtors to borrow more; the biggest debtor in any modern
> economy is its government).
>


I'd love to have governments do as I tell them, but they won't listen.  :)


> This debt, too, doesn't need to be paid back. It should be defaulted. Defaulting
> on the government debt will make creditors unlikely to loan to the government
> again. More importantly, paying it off will involve coercion -- via taxation or
> some other coercive means. Yes, I know, the wealthy creditors who lent to the
> government enjoy being paid off by taxes and the like. Well, that has to stop
> and would undermine the Hamiltonian notion of having national debt to cleave the
> wealthy to the government. (Granted, my recommendation here would be unpopular
> with these same creditors and they would try to persuade everyone that the world
> will end if the government default or were just abolished outright.*)
>
>

The US *is* defaulting on the debt by devaluing the dollar (and hoping
that nobody notices).

Your economic theory comments ignore the practical situation that the
US in now in.  The government is owned by the wealthy and has been
used and is currently being used to expedite the transfer of all the
wealth in the nation into the pockets of the already unbelievably
wealthy few.  Dollar devaluation doesn't much affect the super-wealthy
who own property, land, gold, etc. in the US and abroad in tax havens.
 As currency devalues, real assets tend to keep their real value.

That's where Obama failed. He had a chance to stop the looting when
the financial crisis hit, but instead he caved in, bailed them out by
giving them billions more and let them carry on as usual.


BillK




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