For those who were looking at the final horror of the death of our internet optomism in The Dollar Crisis, there has been that sneaking fear that we might turn into the next emerging nation financial melt down. But what Brad deLong and Stepehn Cohen make reasonably clear, there is a critical difference. America is in hawk for dollars, and not for some foreign currency. The tragi-comedy here is that this is the living manifestation of the old alledge keynes quote:
If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.Since the big problem at this point is that the american dollar has been salted away all over the planet, as an allegedly safe currency - so it is not like anyone wants a run on settling these debts soon.
[ cf wiki quote ]
So for the time being, there is a place to work on unwinding this series of transactions.
The other fun laugh I got from the book was how
...was that Gates had chosen the right parents --since this line points out more than a few of the core problems that the cult of free marketeering has failed to address in the real world.
In theory we can not get into the current financial crisis, since in a purely Adam Smithian Model of the way that the economy should be working, the demand for foreign products that has driven the trade deficit, would be balanced by allowing the dollar to drop. Thus the price of foreign goods, services, and products become more expensive in local currency, thus providing an impletus to buy locally. Which would then provide the goods and services to be sold abroad, and returning the economies back into balance.
Ah yes, but that has not happened... So either there are defects in FreeMarketeering that will need to be addressed and resolved, or, it is time to start a witch hunt against the TheyThemThoseFolks.
The authors are not gathering faggots for the fire, nor are they weighing people to see if they will float on par with a Goose. Instead they look at both the actual american "industrial policy" of the post WWII era as well as the adoption of the financialization solution that shifted america officially into being not merely the new 'bank of england' model of the global empire, but also the larger part of the street.
I would have preferred if they had taken the time to address Alfred Thayer Mahan and The Influence of Sea Power upon History as the original shift of america to an industrial policy. Which fortuitously was written almost a decade before the Spanish American War offered americans a chance to address whether Manifest Destiny comes from the Barrel of a Gun, or the divine mandate to colonize the world.... So it might well be that the whole debate about Manifest Destiny was a polite way of avoiding the somewhat vulgar debate about a Nationalized Industrial Policy hiding behind the skirts of the military.
In like manner it would have added more to the argument if they had stressed more about the national strategic plans to support Japan and the four little tigers of asia, so that they would not fall to communism, the communism of the Dengist Revisionist Capitalist Roader Deviationalism. Ironically the very dragon of doom that would rise up in 1980, and by the end of the decade be well ready to support the rise of sovereign funds. Some of them run by the little princes....
But I can also understand why that was not a hot rocket ride anyone from the baby boomer generation really wanted to get on - since, well, it messes with the myth systems about the free market, as well as what should the USofA done with the so called strategic requirements to keep the RimPac nations safe from ChiComm interventions? Even more so after Nixon opened the door to china, and abandoned our great war allies of not only South Vietnam, but the players in laos and cambodia as well...
Now should americans really be discussing the complications of the economic policies, well, when there is a time of, well, what ever it is that is like a cold war, but with more Umph...
Since clearly if we whine about the policies that were taken under the Reagan administration, are we supporting the cold warriors? You know, to support the cold war? Or... And doesn't that also open up the very debate about the politics of macro economics in these very times, when it might be possible that a muslim, kenyan, darkie were really the commander in chief while various sectors of the military were able to avail themselves of congressional funded hostile fire tax event sequences?
Ah yes... what if we were to be honest as a nation and openly discuss the problems that actually occur? Should people be allowed to hide behind the ideological rhetoric of a mythological 'capitalism' any more than they should be allowed to hide behind any other form of mythology?
Also important in the discussion is whether or not the rise of the USofA was a religious miracle, or something that we can discuss in rational boring and pedantic tones? Should we be so impolite as to talk about americans selling arms to all takers, as long as they paid cash on the barrel head - before we opted in to both world wars? Or would that too be the vulgarity of actually discussing real money issues, even if they piece the mystic of our QoolKidWays?
For those of us who hoped that the internet age was truly going to set us free from the folly and stoopid of bad economic theory - the tragedy remains that it did not. The free marketeering libertarians were not willing to be honest about their approaches to industrial policies, any more than the folly of the liberals and their myths about industrial policies.
We can only hope that books like this will offer people a starting point for better discussions about which defunct economist they want to rule their ideology.
Who knows, it might even offer them a hope that we can keep working the problem for a solution that will not require us to turn off our brains, and go with the insane!