by Prof Michael Hudson
November 1, 2010
Moreover, it may well be asked whether we can
take it for granted that a return to freedom of exchanges is really a
question of time.
Even if the reply were in the affirmative, it is
safe to assume that after a period of freedom the regime of control will be
restored as a result of the next economic crisis. (Paul Einzig, Exchange
Control - 1934).
Great structural changes in world trade and finance occur quickly - by
quantum leaps, not by slow marginal accretions.
The 1945-2010 era of relatively open trade,
capital movements and foreign exchange markets is being destroyed by a
predatory financial opportunism that is breaking the world economy into two
a dollar sphere in which central banks
in Europe, Japan and many OPEC and Third World countries hold their
reserves the form of U.S. Treasury debt of declining
a BRIC-centered sphere, led by China,
India, Brazil and Russia, reaching out to include Turkey and Iran,
most of Asia, and major raw materials exporters that are running
What is reversing trends that seemed
irreversible for the past 65 years is the manner in which the United States
has dealt with its bad-debt crisis.
Federal Reserve and Treasury are seeking to inflate the economy
out of debt with an explosion of bank liquidity and credit - which means yet
more debt. This is occurring largely at other countries' expense, in a way
that is flooding the global economy with electronic "keyboard" bank credit
while the U.S. balance-of-payments deficit widens and U.S. official debt
soars beyond any foreseeable means to pay.
The dollar's exchange rate is plunging, and U.S.
money managers themselves are leading a capital flight out of the domestic
economy to buy up foreign currencies and bonds, gold and other raw
materials, stocks and entire companies with cheap dollar credit.
This outflow from the dollar is not the kind of capital that takes the form
of tangible investment in plant and equipment, buildings, research and
development. It is not a creation of assets as much as the creation of debt,
and its multiplication by mirroring, credit insurance, default swaps and an
array of computerized forward trades.
The global financial system has
decoupled from trade and investment, taking on a life of its own.
In fact, financial conquest is seeking today what military conquest did in
control of land and basic infrastructure,
industry and mining, banking systems and even government finances to
extract the economic surplus as interest and tollbooth-type economic
U.S. officials euphemize this policy as "quantitative easing."
The Federal Reserve is flooding the banking
system with so much liquidity that Treasury bills now yield less than 1%,
and banks can draw freely on Fed credit. Japanese banks have seen yen
borrowing rates fall to 0.25%.
This policy is based on a the wrong-headed idea that if the Fed provides
liquidity, banks will take the opportunity to lend out credit at a markup,
"earning their way out of debt" - inflating the economy in the process. And
when the Fed talks about "the economy," it means asset markets - above all
for real estate, as some 80% of bank loans in the United States are mortgage
One-third of U.S. real estate is now reported to be in negative equity, as
market prices have fallen behind mortgage debts. This is bad news not only
for homeowners but also for their bankers, as the collateral for their
mortgage loans does not cover the principal. Homeowners are walking away
from their homes, and the real estate market is so thoroughly plagued with a
decade of deception and outright criminal fraud that property titles
themselves are losing security.
And despite FBI findings that financial fraud is
found in over three-quarters of the packaged mortgages they have examined,
Obama Justice Department has not sent a single
bankster to jail.
Instead, the financial crooks have been placed in charge - and they are
using their power over government to promote their own predatory gains,
having disabled U.S. public regulatory agencies and the criminal justice
system to create a new kind of centrally planned economy in the hands of
As Joseph Stiglitz recently observed:
In the years prior to the breaking of the
bubble, the financial industry was engaged in predatory lending
practices, deceptive practices.
They were optimizing not in producing
mortgages that were good for the American families but in maximizing
fees and exploiting and predatory lending. Going and targeting the least
educated, the Americans that were most easy to prey on.
We've had this well documented. And there was the tip of the iceberg
that even in those years the FBI was identifying fraud. When they see
fraud, it's really fraud.
But beneath that surface, there were
practices that really should have been outlawed if they weren't illegal.
…the banks used their political power to make sure they could get away
with this [and]… that they could continue engaging in these kinds of
predatory behaviors… there's no principle. It's money. It's campaign
contributions, lobbying, revolving door, all of those kinds of things.
…it's like theft… A good example of that might be [former Countrywide
CEO] Angelo Mozillo, who recently paid tens of millions of dollars in
fines, a small fraction of what he actually earned, because he earned
hundreds of millions.
The system is designed to actually encourage that kind of thing, even
with the fines. … we fine them, and what is the big lesson? Behave
badly, and the government might take 5% or 10% of what you got in your
ill-gotten gains, but you're still sitting home pretty with your several
hundred million dollars that you have left over after paying fines that
look very large by ordinary standards but look small compared to the
amount that you've been able to cash in.
The fine is just a cost of doing business. It's like a parking fine.
Sometimes you make a decision to park knowing that you might get a fine
because going around the corner to the parking lot takes you too much
I think we ought to go do what we did in the S&L [crisis] and actually
put many of these guys in prison. Absolutely. These are not just
white-collar crimes or little accidents. There were victims. That's the
There were victims all over the world… the financial sector
really brought down the global economy and if you include all of that
collateral damage, it's really already in the trillions of dollars.
This victimization of the international
financial system is a consequence of the U.S. Government's attempt to bail
out the banks by re-inflating U.S. real estate, stock and bond markets at
least to their former Bubble Economy levels.
This is what U.S. economic policy and even its
foreign policy is now all about, including de-criminalizing financial fraud.
As Treasury Secretary Tim Geithner tried
to defend this policy:
"Americans were rightfully angry that the
same firms that helped create the economic crisis got taxpayer support
to keep their doors open. But the program was essential to averting a
second Great Depression, stabilizing a collapsing financial system,
protecting the savings of Americans [or more to the point, he means,
their indebtedness] and restoring the flow of credit that is the
oxygen of the economy."
Other economists might find a more fitting
analogy to be carbon dioxide and debt pollution.
"Restoring the flow of credit" is simply a
euphemism for keeping the existing, historically high debt levels in place
rather than writing them down - and indeed, adding yet more debt ("credit")
to enable home buyers, stock market investors and others to use yet more
debt leverage to bid asset prices back up to rescue the banking system from
the negative equity into which it has fallen.
That is what Mr. Geithner means by "stabilizing
a collapsing financial system" - bailing banks out of their bad loans and
making all the counterparties of AIG's fatal financial gambles whole at 100
cents on the dollar.
The Fed theorizes that if it provides nearly free liquidity in unlimited
amounts, banks will lend it out at a markup to "reflate" the economy. The "recovery" that is envisioned is one of new debt creation.
This would rescue the biggest and most
risk-taking banks from their negative equity, by pulling homeowners out of
Housing prices could begin to
But the hoped-for new borrowing is not occurring. Instead of lending more -
at least, lending at home - banks have been tightening their loan standards
rather than lending more to U.S. homeowners, consumers and businesses since
This has obliged debtors to start paying off the
debts they earlier ran up. The U.S. saving rate has risen from zero three
years ago to 3% today - mainly in the form of amortization to pay down
credit-card debt, mortgage debt and other bank loans. Instead of lending
domestically, banks are sending the Fed's tsunami of credit abroad, flooding
world currency markets with cheap U.S. "keyboard credit."
The Fed's plan is like that of the Bank of Japan
after its bubble burst in 1990:
The hope is that lending to speculators will
enable banks to earn their way out of debt.
So U.S. banks are engaging in interest-rate
arbitrage (the carry trade), currency speculation, commodity speculation
(driving up food and mineral prices sharply this year), and buying into
companies in Asia and raw materials exporters.
By forcing up targeted currencies against the dollar, this U.S. outflow into
foreign exchange speculation and asset buy-outs is financial aggression. And
to add insult to injury, Mr. Geithner is accusing China of "competitive
This is a euphemistic term of invective for
economies seeking to maintain currency stability. It makes about as much
sense as to say "aggressive self-defense." China's interest, of course, is
to avoid taking a loss on its dollar holdings and export contracts
denominated in dollars (as valued in its own domestic renminbi).
Countries on the receiving end of this U.S. financial conquest ("restoring
stability" is how U.S. officials characterize it) understandably are seeking
to protect themselves. Ultimately, the only serious way to do this is to
erect a wall of capital controls to block foreign speculators from deranging
currency and financial markets.
Changing the international financial system is by no means easy. How much of
alternative do countries have, Martin Wolf recently asked.
"To put it crudely," he wrote, "the US wants to inflate the rest of the
world, while the latter is trying to deflate the US. The US must win,
since it has infinite ammunition: there is no limit to the dollars the
Federal Reserve can create.
What needs to be discussed is the terms of
the world's surrender: the needed changes in nominal exchange rates and
domestic policies around the world". 
Mr. Wolf cites New York Federal Reserve chairman
William C. Dudley to the effect that
Quantitative Easing is primarily an attempt
to deal with the mortgage crisis that capped a decade of bad loans and
Economic recovery, the banker explained on
October 1, 2010,
"has been delayed because households have
been paying down their debt - a process known as deleveraging."
In his view, the U.S. economy cannot recover
without a renewed debt leveraging to re-inflate the housing market.
By the "U.S. economy" and "recovery," to be sure, Mr. Dudley means his own
constituency the banking system, and specifically the largest banks that
gambled the most on the real estate bubble of 2003-08.
He acknowledges that the bubble,
"was fueled by products and practices in the
financial sector that led to a rapid and unsustainable buildup of
leverage and an underpricing of risk during this period," and that
household debt has risen "faster than income growth… since the 1950s."
But this debt explosion was justified by the,
"surge in home prices [that] pushed up the
ratio of household net worth to disposable personal income to nearly 640
Instead of saving, most Americans borrowed as
much as they could to buy property they expected to rise in price.
For really the first time in history an entire
population sought to get rich by running to debt (to buy real estate, stocks
and bonds), not by staying out of it. But now that asset prices have
plunged, people are left in debt. The problem is, what to do about it.
Disagreeing with critics who,
"argue that the decline in the household
debt-to-income ratio must go much further before the deleveraging
process can be complete," or who even urge "that household
debt-to-income ratios must fall back to the level of the 1980s," Mr.
Dudley retorts that the economy must inflate its way out of the debt
corner into which it has painted itself.
"First, low and declining inflation makes it
harder to accomplish needed balance sheet adjustments."
In other words, credit (debt) is needed to bid
real estate prices back up.
A lower rather than higher inflation rate would
"slower nominal income growth. Slower
nominal income growth, in turn, means that less of the needed adjustment
in household debt-to-income ratios will come from rising incomes. This
puts more of the adjustment burden on paying down debt."
And it is debt deflation that is plaguing the
economy, so the problem is how to re-inflate (asset) prices.
How much would the Fed have to purchase
to have a given impact on the level of long-term interest rates and
What constraints exist in terms of
limits to balance-sheet expansion, and what are the costs involved
that could impede efforts to meet the dual mandate now or in the
On October 15, 2010, Fed Chairman Ben
Bernanke explained that he wanted
FED to encourage inflation - his of program of Quantitative
Easing - and acknowledged that this would drive down the dollar against
Flooding the U.S. banking system with liquidity
will lower interest rates, increasing the capitalization rate of real estate
rents and corporate income. This will re-inflate asset prices - by creating
yet more debt in the process of rescue banks from negative equity by pulling
homeowners out of their negative equity.
But internationally, this policy means that
foreign central banks receive less than 1% on the international reserves
they hold in Treasury securities - while U.S. investors are making much
higher returns by borrowing "cheap dollars" to buy Australian, Asian and
European government bonds, corporate securities, and speculating in foreign
exchange and commodity markets.
Mr. Bernanke proposes to solve this problem by injecting another $1 trillion
of liquidity over the coming year, on top of the $2 trillion in new Federal
Reserve credit already created during 2009-10. The pretense is that
bailing Wall Street banks out of their losses is a precondition for reviving
employment and consumer spending - as if the giveaway to the financial
sector will get the economy moving again.
The working assumption is that if the Fed provides liquidity, banks will
lend it out at a markup. At least this is the dream of bank loan officers.
The Fed will help them keep the debt overhead in place, not write it down.
But as noted above, the U.S. market is "loaned up."
Borrowing by homeowners, businesses and
individuals is shrinking. Unemployment is rising, stores are closing and the
economy is succumbing to debt deflation. But most serious of all, the QE II
program has a number of consequences that Federal Reserve policy makers have
not acknowledged. For one thing, the banks have used the Federal Reserve and
Treasury bailouts and liquidity to increase their profits and to continue
paying high salaries and bonuses.
What their lending is inflating are asset
prices, not commodity prices (or output and employment). And asset-price
inflation is increasing the power of property over living labor and
production, elevating the FIRE sector further over the "real" economy.
These problems are topped by the international repercussions that Mr. Dudley
referred to as the "limits to balance-of-payments expansion."
Cheap electronic U.S. "keyboard credit" is going
abroad as banks try to earn their way out of debt by financing arbitrage
gambles, glutting currency markets while depreciating the U.S. dollar.
So the upshot of the Fed trying save the banks
from negative equity is to flood the global economy with a glut of U.S.
dollar credit, destabilizing the global financial system.
Can foreign economies
rescue the U.S. banking system?
The international economy's role is envisioned as a deus ex machina
to rescue the economy.
Foreign countries are to serve as markets for a
resurgence of U.S. industrial exports (and at least arms sales are taking
off to India and Saudi Arabia), and most of all as financial markets for
U.S. banks and speculators to make money at the expense of foreign central
banks trying to stabilize their currencies.
The Fed believes that debt levels can rise and become more solvent if U.S.
employment increases by producing more exports. The way to achieve this is
presumably to depreciate the dollar - the kind of "beggar-my-neighbor"
policy that marked the 1930s. Devaluation will be achieved by flooding
currency markets with dollars, providing the kind of zigzagging
opportunities that are heaven-sent for computerized currency trading, short
selling and kindred financial options.
Such speculation is a zero-sum game. Someone must lose. If Quantitative
Easing is to help U.S. banks earn their way out of negative equity, by
definition their gains must be at the expense of foreigners.
This is what makes QE II is a form of financial
This is destructive of the global currency stability that is a precondition
for stable long-term trade relationships. Its underlying assumptions also
happen to be based on Junk Economics. For starters, it assumes that
international prices are based on relative price levels for goods and
services. But only about a third of U.S. wages are spent on commodities.
Most is spent on payments to the finance,
insurance and real estate (FIRE) sector and on taxes. Housing and debt
service typically absorb 40% and 15% of wage income respectively. FICA Wage
withholding for Social Security and Medicare taxes absorb 11%, and income
and sales taxes another 15 to 20%.
So before take-home pay is available for
consumer spending on goods and services, these FIRE-sector charges make the
cost of living so high as to render American industrial labor uncompetitive
in world markets. No wonder the U.S. economy faces a chronic trade deficit!
The FIRE sector overhead has become structural, not merely a marginal
problem. To restore its competitive industrial position, the United States
would have to devalue by much more than the 40% that it did back in 1933.
Trying to "inflate its way out of debt" may help bank balance sheets
recover, but as long as the economy remains locked in debt deflation it will
be unable to produce the traditional form of economic surplus needed for
A debt write-down would be preferable to the
policy of keeping the debts on the books and distorting the U.S. economy
with inflation - and engaging in financial aggression against foreign
economies. The political problem, of course, is that the financial sector
has taken control of U.S. economic planning - in its own self-interest, not
that of the economy at large.
A debt write-down would threaten the financial
sector's creditor power over the economy.
So it is up to foreign economies to enable U.S. banks to earn their way out
of negative equity. For starters, there is the carry trade based on
interest-rate arbitrage - to borrow at 1%, lend at a higher interest rate,
and pocket the margin (after hedging the currency shift). Most of this
financial outflow is going to China and other Asian countries, and to raw
materials exporters. Australia, for example, has been raising its interest
rates in order to slow its own real estate bubble.
Rather than slowing speculation in its large
cities by fiscal policy - a land tax - its central bank is operating on the
principle that a property is worth whatever a bank will lend against it.
Raising interest rates to the present 4.5% reduces the capitalization rate
for property rents - and hence shrinks the supply of mortgage credit that
has been bidding up Australian property prices.
This interest-rate policy has two unfortunate side effects for Australia -
but a free lunch for foreign speculators.
First of all, high interest rates raise
the cost of borrowing across the board for doing business and for
Second - even more important for the
present discussion - high rates attract foreign "hot money" as
speculators borrow at low interest in the United States (or Japan,
for that matter) and buy high-yielding Australian government bonds.
The effect is to increase the Australian
dollar's exchange rate, which recently has achieved parity with the U.S.
This upward valuation makes its industrial
sector less competitive, and also squeezes profits in its mining sector. So
on top of Australia's rising raw-materials exports, its policy to counter
its real estate bubble is attracting foreign financial inflows, providing a
free ride for international arbitrageurs.
Over and above their interest-rate
arbitrage gains is the foreign currency play - rising exchange rates in
Australia and many Asian countries as the U.S. dollar glut swamps the
ability of central banks to keep their exchange rates stable.
This foreign-currency play is where most of the speculative action is today
as speculators watching these purchases have turned the currencies and bonds
of other raw-materials exporters into speculative vehicles.
This currency speculation is the most
aggressive, predatory and destructive aspect of U.S. financial behavior. Its
focus is now shifting to the major nation that has resisted U.S. attempts to
force its currency up: China.
The potentially largest prize for U.S. and
foreign speculators would be an upward revaluation of its
The House Ways and Means Committee recently insisted that China raise its
exchange rate by the 20 percent that the Treasury and Federal Reserve have
suggested. Suppose that China would obey this demand. This would mean a
bonanza for U.S. speculators. A revaluation of this magnitude would enable
them to put down 1% equity - say, $1 million to borrow $99 million - and buy
Chinese renminbi forward.
The revaluation being demanded would produce a
2000% profit of $20 million by turning the $100 million bet (and just $1
million "serious money") into $120 million.
Banks can trade on much larger, nearly
infinitely leveraged margins.
Can U.S. banks create
enough electronic "keyboard credit" to buy up the whole world?
The Fed's QE II policy poses a logical question:
Why can't U.S. credit buy out the entire
world economy - all the real estate, companies and mineral rights
yielding over 1%, with banks and their major customers pocketing the
Under current arrangements the dollars being
pumped into the global economy are recycled back into U.S. Treasury IOUs.
When foreign sellers turn over their dollar
receipts to their banks for domestic currency, these banks turn the payment
over to the central bank - which then faces a Hobson's Choice:
either to sell the dollars on the foreign
exchange market (pushing up their currency against the dollar), or avoid
doing this by buying more U.S. Treasury securities and thus keeping the
dollar payment within the U.S. economy.
Why can't this go on ad infinitum?
What makes these speculative capital inflows so unwelcome abroad is that
they do not contribute to tangible capital formation or employment. Their
effect is simply to push up foreign currencies against the dollar,
threatening to price exporters out of global markets, disrupting domestic
employment as well as trade patterns.
These financial gambles are setting today's exchange rates, not basic
In terms of relative rates of return, foreign central banks earn 1% on their
U.S. Treasury bonds, while U.S. investors buy up the world's assets. In
effect, U.S. diplomats are demanding that other nations relinquish their
trade surpluses, private savings and general economic surplus to U.S.
investors, creditors, bankers, speculators, arbitrageurs and vulture funds
in exchange for this 1% return on U.S. dollar reserves of depreciating value
- and indeed, in amounts already far beyond the foreseeable ability of the
U.S. economy to generate a balance-of-payments surplus to pay this debt to
The global economy is being turned into a tributary system,
achieving what military conquest sought in times past.
This turns out to be implicit in QE II.
Arbitrageurs and speculators are swamping Asian
and Third World currency markets with low-priced U.S. dollar credit to make
predatory trading profits at the expense of foreign central banks trying to
stabilize their exchange rates by selling their currency for
dollar-denominated securities - under conditions where the United States and
Canada are blocking reciprocal direct investment (e.g., Potash Corp. of
Saskatchewan in Canada and Unocal in the United States.).
The road to capital
Hardly by surprise, other countries are taking defensive measures against
this speculation, and against "free credit" takeovers using inexpensive U.S.
electronic "keyboard bank credit."
For the past few decades they have stabilized
their exchange rates by recycling dollar inflows and other foreign currency
buildups into U.S. Treasury securities. The Bank of Japan, for instance,
recently lowered its interest rate to just 0.1% in an attempt to induce its
banks to lend back abroad the foreign exchange that is now coming in as its
banks are being repaid on their own carry-trade loans.
It also offset the repayment of past carry-trade
loans extended by its own banks in yen by selling $60 billion of yen and
buying U.S. Treasury securities, of which it now owns over $1 trillion.
Foreign economies are now taking more active steps to shape "the market" in
which international speculation occurs. The most modest move is to impose a
withholding tax on interest payments to foreign investors.
Just before the IMF meetings on October 9-10,
2010, Brazil doubled the tax on foreign investment in its government bond to
4%. Thailand acted along similar lines a week later. It stopped exempting
foreign investors from having to pay the 15% interest-withholding tax on
their purchases of its government bonds.
Finance Minister Korn Chatikavinij warned
that more serious measures are likely if "excessive" speculative inflows
keep pushing up the baht. "We need to consider the rationality of capital
inflows, whether they are for speculative purposes and how much they
generate volatility in the baht," he explained But the currency continues to
Such tax withholding discourages interest-rate arbitrage via the bond
market, but leaves the foreign-currency play intact - and that is where the
serious action is today. In the 1997 Asian Crisis, Malaysia blocked foreign
purchases of its currency to prevent short-sellers from covering their bets
by buying the ringgit at a lower price later, after having emptied out its
central bank reserves.
The blocks worked, and other countries are now
reviewing how to impose such controls.
Longer-term institutional changes to more radically restructure the global
financial system may include dual exchange rates such as were prevalent from
the 1930 through the early 1960s, one (low and stable) for trade and at
least one other (usually higher and more fluctuating) for capital movements.
But the most decisive counter-strategy to U.S.
QE II policy is to create a full-fledged BRIC-centered
currency bloc that would minimize use of the dollar.
China has negotiated currency-swap agreements with Russia, India, Turkey and
Nigeria. These swap agreements may require exchange-rate guarantees to make
central-bank holders "whole" if a counterpart currency depreciates. But at
least initially, these agreements are being used for bilateral trade. This
saves exporters from having to hedge their payments through forward
purchases on global exchange markets.
A BRIC-centered system would reverse the policy of open and unprotected
capital markets put in place after World War II.
This trend has been in the making since
the BRIC countries met last year in
Yekaterinburg, Russia, to discuss such an international payments system
based on their own currencies rather than the dollar, sterling or Euro.
In September, China supported a Russian proposal
to start direct trading using the Yuan and the ruble rather than pricing
their trade or taking payment in U.S. dollars or other foreign currencies.
China then negotiated a similar deal with Brazil. And on the eve of the IMF
meetings in Washington on Friday, Premier Wen stopped off in Istanbul to
reach agreement with Turkish Prime Minister Erdogan to use their own
currencies in a planned tripling Turkish-Chinese trade to $50 billion over
the next five years, effectively excluding the dollar.
China cannot make its currency a world reserve currency, because it is not
running a deficit and therefore cannot supply large sums of renminbi to
other countries via trade.
So it is negotiating currency-swap agreements
with other countries, while using its enormous dollar reserves to buy up
natural resources in Australia, Africa and South America.
This has reversed the dynamics that led speculators to gang up and cause the
1997 Asia crisis. At that time the great speculative play was against the
Speculators swamped their markets with sell
orders, emptying out the central bank reserves of countries that tried (in
vain) to keep their exchange rates stable in the face of enormous U.S. bank
credit extended to
George Soros and other hedge fund
'managers' and the vulture funds that followed in their wake.
The IMF and U.S. banks then stepped in and
offered to "rescue" these economies if they agreed to sell off their best
companies and resources to U.S. and European buyers.
This was a major reason why so many countries have tried to free themselves
from the IMF and its neoliberal austerity programs, euphemized as
"stabilization" plans rather than the economic poison of chronic dependency
and instability programs.
Left with only Turkey as a customer by 2008, the
IMF was a seemingly anachronistic institution whose only hope for survival
lay in future crises. So that of 2009-10 proved to be a godsend. At least
the IMF found neoliberal Latvia and Greece willing to subject themselves to
Today its destructive financial
austerity doctrine is applied mainly by Europe's "failed economies."
This has changed the equation between industrial-nation creditors and Third
World debtors. Many dollar-strapped countries have been subject to repeated
raids on their central banks - followed by IMF austerity programs that have
shrunk their domestic markets and made them yet more dependent on imports
and foreign investments, reduced to selling off their public infrastructure
to raise the money to pay their debts.
This has raised their cost of living and doing
business, shrinking the economy all the more and creating new budget
squeezes driving them even further into debt. But China's long-term trade
and investment deals - to be paid in raw materials, denominated in renminbi
rather than dollars - is alleviating their debt pressures to the point where
currency traders are jumping on the bandwagon, pushing up their exchange
The major international economic question today
is how such national economies can achieve greater stability by insulating
themselves from these predatory financial movements.
1 Paper presented at the Boeckler Foundation
meetings in Berlin, October 30, 2010. I am indebted to Eric Janszen of i-tulip
for bringing the Einzig quote to my attention.
2 "Stiglitz Calls for Jail Time for Corporate Crooks," DailyFinance:
http://srph.it/aRwI4I, October 21, 2010.
3 Tim Geithner, "Five Myths about Tarp," Washington Post, October 10,
4 Martin Wolf, "Why America is going to win the global currency battle,"
Financial Times, October 13, 2010.
5 William C. Dudley, "The Outlook, Policy Choices and Our Mandate,"
Remarks at the Society of American Business Editors and Writers Fall
Conference, City University of New York, Graduate School of Journalism,
New York City, October 1, 2010. http://www.zerohedge.com/article/why-imf-meetings-failed-and-coming-capital-controls.
6 Nobel Laureate Joseph Stiglitz: Foreclosure Moratorium, Government
Stimulus Needed to Revive US Economy, Democracy Now, Oct. 21, 2010.