Introduction to the German Edition
In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade and “foreign aid” (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping their assets and imposing austerity. The reality since World War I is that the United States has... Read More
While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in... Read More
One of the great ironies of American politics is that most politicians who talk about helping the middle class support policies that, by expanding the welfare-warfare state, are harmful to middle-class Americans. Eliminating the welfare-warfare state would benefit middle-class Americans by freeing them from exorbitant federal taxes, including the Federal Reserve’s inflation tax.Politicians serious about... Read More
A famous maxim has it that in the short run markets are voting machines, but in the longer run weighing machines. The point is that though short run movements can be remarkably fickle and irrational, markets do – eventually – self-correct and produce reasonable prices. But “eventually” can be a long time, especially where currency... Read More
"Margin Call from Hell"
The crisis that began seven years ago with easy lending and subprime mortgages, has entered its final phase, a currency war between the world’s leading economies each employing the same accommodative monetary policies that have intensified market volatility, increased deflationary pressures, and set the stage for another tumultuous crack-up. The rising dollar, which has soared... Read More
Ukraine War Driven by Gas-Dollar Link
If there was a way the United States could achieve its long-term strategic objectives and, at the same time, avoid a war with Russia, it would so. Unfortunately, that is not an option, which is why there’s going to be a clash between the two nuclear-armed adversaries sometime in the near future. Let me explain:... Read More
More at The Real News Is the New BRICS Bank a Challenge to US Global Financial Power? Michael Hudson and Leo Panitch discuss and debate the significance of the new international development bank created by Brazil, Russia, India, China and South Africa – 6 min ago Michael Hudson is a Distinguished Research Professor of Economics... Read More
Is it time we shorted George Soros? Judging by his latest book, The Tragedy of the European Union: Disintegration or Revival?, he certainly seems to have passed his sell-by date. While the book makes some good points about Germany’s role in imposing gratuitously severe austerity on Europe, for Soros watchers all this is hardly new.... Read More
Federal Reserve and Wall Street Assassinate US Dollar
Since 2006, the US dollar has experienced a one-quarter to one-third drop in value to the Chinese yuan, depending on the choice of base. Now China is going to let the dollar decline further in value. China also says it is considering undermining the petrodollar by pricing oil futures on the Shanghai Futures Exchange in... Read More
The U.S. dollar’s reserve currency role is almost over, says former top Reagan administration economic adviser Paul Craig Roberts. As he points out, the dollar’s international credibility was dealt another hammer blow by the federal shutdown in October. Of particular note is the fact that the shutdown revived fears, albeit exaggerated ones, that the U.S.... Read More
Escape From The Dollar
Paul Craig Roberts thinks the Fed has backed itself into corner. A rise in interest rates would strengthen the dollar, give the dollar new life as world reserve currency, and halt the movement into gold, but a rise in rates would collapse the bond and stock markets and reduce the value of derivatives on the... Read More
Barack Obama’s economic recovery has been a complete bust. Unemployment is high, the economy is barely growing, and inequality is greater than anytime on record. On top of that, inflation has dropped to 1.2 percent, private sector hiring continues to disappoint and, according to Gallup’s “Economic Confidence” survey, households and consumers remain “deeply negative”. More... Read More
September was not a good month for the U.S. dollar. The world’s reserve currency is sustained in large part by the Petrodollar, the agreement by the Saudis and OPEC to price oil in dollars and only accept dollars for payment. The US gets a guaranteed demand for its fiat currency and in exchange the US... Read More
The U.S. dollar’s predicament can be summed up in three observations: The U.S. balance of payments deficits have multiplied three-fold since the 1980s, and now typically run between 2.5 and 5 percent of GDP. Manufacturing’s share of GDP is down to 11 percent. Services do little exporting. Taken together, these facts spell doom for the... Read More
“Fool me once, shame on you. Fool me twice, shame on me.” So says an ancient Chinese proverb. It is worth bearing in mind in dealing with present-day Beijing. No matter how often Uncle Sam gets his clock cleaned in China, his credulousness remains a gift that keeps on giving for the Beijing leadership. The... Read More
The U.S. dollar had a good day today to close over the 100-yen mark for the first time in four years. This means the dollar’s yen value has recovered nearly 30 percent in just seven months — a truly remarkable performance but one that says much more about traders’ psychology than about fundamentals. One driver... Read More
ASTANA, Kazakhstan. “If it bleeds, it leads” says an old media industry maxim. So where the future of the world currency system is concerned, all eyes these days are on the badly battered euro. Almost all, anyway. One observer who has been trying to see beyond the current euro crisis is the Nobel Prize-winning economist... Read More
The Buck Stops Where?
Paul Volcker is worried about the future of the dollar and for good reason. The Fed has initiated a program (Quantitative Easing) that presages an end to Bretton Woods 2 and replaces it with different system altogether. Naturally, that's made trading partners pretty nervous. Despite the unfairness of the present system--where export-dependent countries recycle capital... Read More
"Save Those Greenbacks for Fishwrap!"
Deflation is not a problem because the Fed can always create inflation by printing more money. Wrong. While it's true that the Fed can print as much money as it chooses, adding to the money stock does not decrease deflation or increase inflation. It merely adds to reserves at the banks. Here's how British economist... Read More
QE2 and Last Rites for the World's Reserve Currency
Millions of Americans have no idea what Quantitative Easing is or how it will effect them personally. That's why Wednesday's announcement that the Fed will purchase another $600 billion in US Treasuries merely reinforced feelings of helplessness and a sense that government spending is out-of-control. Unfortunately, Ben Bernanke's rambling explanation of QE2 in a Washington... Read More
Michael Hudson as interviewed by Amy Goodman and Juan Gonzalez on Democracy Now! // // ]]> Summary: The Federal Reserve will pump $600 billion more into the U.S. economy and keep interest rates at historical low levels. The short-term impact of the Fed’s move—known as quantitative easing—has been a jump in stock prices across the... Read More
Michael writes on currency speculation in today’s Financial Times – Capital controls will follow the weak dollar. It is well worth registering to this excellent news source. Read more at the FT.
For years, people have been calling for the world to forgive third world debt. The amount of effort that poverty stricken countries make just to pay interest on their debt while people are starving and living in misery is shameful. Corrupt governments stole big portions of what was borrowed instead of investing it in infrastructure... Read More
An Interview With Economist Menzie Chinn
Menzie Chinn, co-author of The Economic Integration of Greater China, teaches economics at the Robert M. LaFollette School of Public Affairs at the University of Wisconsin. Whitney: What is the present composition of reserve holdings in central banks, and has there been a substantial falloff in US dollar reserves in recent years? Are central banks... Read More
"Obama Demands Pay in Euros!"
The "dollar debate" on the Internet has been ferocious and emotionally-charged, but sadly lacking in logic. To oppose the "dollar will crash" theorists is like arguing a woman's right to choose with the fist-waving throng assembled outside an abortion clinic. The results are equally disappointing. To say that "minds are already made up and the... Read More