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Currency wars: Another phase in the capitalist breakdown
international |
anti-capitalism |
other press
Saturday October 09, 2010 20:44 by T
Breakdown in global economic relations This report outlines how the currency wars now taking place represent another phase in the breakdown of the capitalist system. For those trying to gain an understanding of what is happening with the international system particulary the recent ups and downs of the relative strengths of the currencies this report on the World Socialists Website (www.wsws.org). It explains how the efforts to kick start the major economies with zero percent interest has failed and now the major powers are trying to stimulate their economies to grow by expanding their exports. For this to happen they would need to devalue their own currencies. But such a move puts the importers at a disadvantage and they in turn are trying to do the same thing. Given that the problems go deeper, such moves cannot resolve any of the inherent conflicts within capitalism. Some quotes from the report are: The semi-annual meeting of the International Monetary Fund and the World Bank which convenes in Washington today is marked by the most serious breakdown in global economic relations since the trade wars and competitive devaluations that characterised the Great Depression of the 1930s.
As their economies continue to stagnate and the risks of further global financial turbulence increase, the major powers, spearheaded by the United States, are waging an increasingly open economic war against China, demanding that its currency, the renminbi (the yuan) rise significantly.
In the early months of 2009, when governments around the world were carrying out stimulus packages aimed at boosting their economies, there was talk of global collaboration. But it was short-lived. By the end of 2009 new contradictions had emerged as the near-bankruptcy of Dubai and the Greek financial crisis pointed to the emergence of the so-called sovereign debt crisis..... ..... At the same time, the economic stimulus provided by the lowering of interest rates had run its course. In both the US and Japan short-term interest rates set by the central bank are so low that monetary authorities have resorted to “quantitative easing”—the purchase of government bonds—in a bid to lower long-term rates. But these measures have failed to boost economic growth. In six of the world’s major economies—the US, Japan, Germany, France, the UK and Italy ..... With stimulus packages and interest rate cuts either ruled out or ineffective, national governments are seeking to expand exports, by reducing the value of their currencies, as the sole remaining measure available to provide an economic boost. But, by its very nature, an export stimulus cannot boost the world economy as a whole. Rather than providing a life raft, competitive devaluations are, as a comment in the Wall Street Journal recently noted, more like shipwrecked sailors trying to stay afloat by climbing on each other’s shoulders. At present the conflict takes an economic form. But other, even more deadly consequences, are certain to follow. The full report can be read at the link below |
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