mfioretti: bretton woods*

Bookmarks on this page are managed by an admin user.

11 bookmark(s) - Sort by: Date ↓ / Title / Voting / - Bookmarks from other users for this tag

  1. After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts. Headed by John Maynard Keynes, British diplomats sought to clean their hands of responsibility for the consequences by promising that all the money they received from Germany would simply be forwarded to the U.S. Treasury.

    The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the Reichsbank printed marks to throw onto the foreign exchange market. The currency declined, import prices soared, raising domestic prices as well. The debt deflation was much like that of Third World debtors a generation ago, and today’s southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).

    In a pretense that the reparations and Inter-Ally debt tangle could be made solvent, a triangular flow of payments was facilitated by a convoluted U.S. easy-money policy. American investors sought high returns by buying German local bonds; German municipalities turned over the dollars they received to the Reichsbank for domestic currency; and the Reichsbank used this foreign exchange to pay reparations to Britain and other Allies, enabling these countries to pay the United States what it demanded.

    But solutions based on attempts to keep debts of such magnitude in place by lending debtors the money to pay can only be temporary. The U.S. Federal Reserve sustained this triangular flow by holding down U.S. interest rates. This made it attractive for American investors to buy German municipal bonds and other high-yielding debts. It also deterred Wall Street from drawing funds away from Britain, which would have driven its economy deeper into austerity after the General Strike of 1926. But domestically, low U.S. interest rates and easy credit spurred a real estate bubble, followed by a stock market bubble that burst in 1929. The triangular flow of payments broke down in 1931, leaving a legacy of debt deflation burdening the U.S. and European economies. The Great Depression lasted until outbreak of World War II in 1939.

    Planning for the postwar period took shape as the war neared its end. U.S. diplomats had learned an important lesson. This time there would be no arms debts or reparations. The global financial system would be stabilized – on the basis of gold, and on creditor-oriented rules. By the end of the 1940s the Untied States held some 75 percent of the world’s monetary gold stock. That established the U.S. dollar as the world’s reserve currency, freely convertible into gold at the 1933 parity of $35 an ounce.
    It also implied that once again, as in the 1920s, European balance-of-payments deficits would have to be financed mainly by the United States. Recycling of official government credit was to be filtered via the IMF and World Bank, in which U.S. diplomats alone had veto power to reject policies they found not to be in their national interest. International financial “stability” thus became a global control mechanism – to maintain creditor-oriented rules centered in the United States.

    To obtain gold or dollars as backing for their own domestic monetary systems, other countries had to follow the trade and investment rules laid down by the United States. These rules called for relinquishing control over capital movements or restrictions on foreign takeovers of natural resources and the public domain as well as local industry and banking systems.

    By 1950 the dollar-based global economic system had become increasingly untenable. Gold continued flowing to the United States, strengthening the dollar – until the Korean War reversed matters. From 1951 through 1971 the United States ran a deepening balance-of-payments deficit, which stemmed entirely from overseas military spending. (Private-sector trade and investment was steadily in balance.)
    Voting 0
  2. by far the most important chart in explaining both the benefits and impact of globalization, free trade, and a changing economy to different constituencies. The greatest benefactors of the extension of the Bretton Woods System (free trade and globalization) following the end of the Cold War have been those who own capital and the poorest people in the world. Unfortunately, as money has moved from the Developed Economies to the Developing World in search of return and comparative advantage, the middle class in the United States and Europe have failed to benefit.
    Voting 0
  3. few would have believed that the Petrodollar did indeed quietly die, although ironically, without much input from either Russia or China, and paradoxically, mostly as a result of the actions of none other than the Fed itself, with its strong dollar policy, and to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico'ed both itself, and its closest Petrodollar trading partner, the US of A.

    As Reuters reports, for the first time in almost two decades, energy-exporting countries are set to pull their "petrodollars" out of world markets this year, citing a study by BNP Paribas (more details below). Basically, the Petrodollar, long serving as the US leverage to encourage and facilitate USD recycling, and a steady reinvestment in US-denominated assets by the Oil exporting nations, and thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance.

    A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.

    This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.

    But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."

    In short, the Petrodollar may not have died per se, at least not yet since the USD is still holding on to the reserve currency title if only for just a little longer, but it has managed to price itself into irrelevance, which from a USD-recycling standpoint, is essentially the same thing.
    Voting 0
  4. There is an idea that wields power unlike any other. Faith in it is truly global: crossing national and ideological barriers and defining the logic of every major economy in the world today.

    That idea is economic growth. The faith is that growth is not only desirable but necessary. What is meant by growth is represented by one little big number: Gross Domestic Product (GDP). From Athens to Beijing, Moscow to Washington, political aspirations and economic achievements are rooted in GDP. We all use it to measure the health of our economies: it’s a one-stop measure for success.

    American and British economists invented GDP in the 30s to help determine the depth of the Great Depression. As a tool, it brought economics out of the dark ages, and allowed governments to take informed steps to escape crisis and despair. During World War II, it was repurposed to help the Allied powers figure out how to out-produce the Axis in tanks and armaments. Economist John Kenneth Galbraith described the significance of GDP as equivalent to ‘several infantry divisions’. Some compared it to the Manhattan Project, others considered it one of the great inventions of of the 20th century.

    it is helpful to recall that some of the most revered early economic thinkers in the West – Adam Smith, David Ricardo, John Stuart Mill, Karl Marx, Joseph Schumpeter – considered economic growth vital, but only temporary, as societies moved toward real development. They all anticipated a historical moment when continued growth would no longer be necessary, no longer desirable – no longer possible. Every race, they understood, must come to an end.

    Regardless of whether they foresaw an essentially saturated market (Smith), or actively argued for a revolutionary transition in which ‘the realm of freedom’ replaced ‘necessity and mundane considerations’ (Marx), all envisioned an end to growth.

    Within a generation, propelled by war and its subsequent US-dominated internationalisation of finance and trade – Bretton Woods, IMF, UN – capitalist nations worldwide embraced the logic of GDP. After the collapse of communism, the rest of the world followed.

    But critics emerged early and in numbers. Shortly before his death in 1968, Robert F Kennedy argued that GDP “measures everything except that which makes life worthwhile”.
    Its logic reigns with little resistance. Indeed, most people in or out of power are unconscious of its role, let alone its dominance. But, based on a controlling yet largely invisible assumption, GDP leaves us with a very narrow and misleading notion of success and progress.
    Voting 0
  5. Biasco dà completamente i numeri. L’ordine di grandezza che lui cita per la nostra svalutazione non ha precedenti storici di rilievo nemmeno in paesi economicamente disastrati, in particolare non si è presentato durante la crisi Argentina del 2002, da lui esplicitamente citata, ed è dieci volte superiore a quello che studiosi seri come Paolo Savona (nonché tutti gli studi applicati che vi ho citato sopra) indicano come verosimile nel nostro caso: il dollaro aumenterebbe di qualcosa fra il 20% e il 30%. Come dimostro nel mio ultimo studio, una simile svalutazione comporterebbe un aumento del prezzo della benzina di circa 12 centesimi al litro, minore dell’aumento di 16 centesimi delle accise che Monti ci ha imposto per restare nell’euro.

    Post scriptum per gli espertoni – Qualcuno dirà: “Maestraaaa! Bagnai bara! Ha inserito nel suo campione anche gli anni di Bretton Woods, nei quali il cambio era fisso, ed è per questo che l’incidenza percentuale delle svalutazioni catastrofiche è così bassa”. Cari espertoni, continuate a far rima con voi stessi. C’è una cosa del sistema di cambi fissi di Bretton Woods che nessuno ricorda: il fatto che i cambi erano aggiustabili. Nel periodo dal 1957 alla metà del 1971, quando Nixon tirò il pacco al resto del mondo sospendendo la convertibilità del dollaro in oro, i quattro sfortunati paesi che abbiamo considerato hanno sperimentato ben 55 riallineamenti, fra cui anche 14 rivalutazioni. Succede nell’11% dei mesi considerati ed è quindi un evento abbastanza frequente, e in almeno un caso (quello del Congo, nel giugno del 1967) piuttosto rilevante (il prezzo del dollaro aumentò del 100%, cioè raddoppiò). Dovete cacciarvelo in testa: non è mai esistito un sistema monetario rigido come l’euro, ed è per questo che l’euro crollerà. Volete aiutarci a farlo in modo controllato, o volete restare sotto le macerie? La risposta spetta a voi, ma per darla correttamente imparate a distinguere chi dà i numeri per motivi di bassa cucina politica da chi cerca di informarvi correttamente. Ne va del futuro dei vostri figli, se vi interessa.
    Voting 0
  6. La Cina di fatto ha annunciato l’inizio della convertibilità mondiale dello Yuan con la più massiccia de-dollarizzazione da quando il mondo ha adottato il dollar-standard. Dal 29 Dicembre, gli scambi fra Cina e Russia, Malesia e Nuova Zelanda potranno essere fatti direttamente fra le valute locali saltando il dollaro.

    La notizia è epocale anche se ampiamente attesa ed è solo il primo passo. Faccio notare che la Cina opera in questo modo:

    Apre accordi di Swap con le banche centrali
    Fa accordi di commercio diretto in Yuan contro valuta locale

    La Cina ha già accordi di Swap con Inghilterra e Svizzera da queste parti e con l’Australia nell’area del pacifico, potete scommettere che seguiranno accordi per il commercio diretto pagati in Yuan-Sterlina e Yuan-Franco Svizzero
    Tags: , , by M. Fioretti (2014-12-28)
    Voting 0
  7. Beijing's move to bail out Russia, on top of its recent aid for Venezuela and Argentina, signals the death of the post-war Bretton Woods world. It’s also marks the beginning of the end for America's linchpin role in the global economy and Japan's influence in Asia.

    What is China's new Asian Infrastructure Investment Bank if not an ADB killer? If Japan, ADB's main benefactor, won't share the presidency with Asian peers, Beijing will just use its deep pockets to overpower it. Lagarde's and Kim’s shops also are looking at a future in which crisis-wracked governments call Beijing before Washington.

    China stepping up its role as lender of last resort upends an economic development game that's been decades in the making. The IMF, World Bank and ADB are bloated, change-adverse institutions. When Ukraine received a $17 billion IMF-led bailout this year it was about shoring up a geopolitically important economy, not geopolitical blackmail.
    Voting 0
  8. Questo articolo rappresenta un tentativo di spiegare cosa è il signoraggio, come si produce ai nostri giorni, quale è la fondamentale differenza tra signoraggio nominale, reale ed imposta da inflazione, quale è il ruolo delle banche commerciali nel processo di creazione della moneta, attraverso il meccanismo del moltiplicatore dei depositi indotto dalla riserva obbligatoria. L’imperfetta conoscenza dei meccanismi economici alla base del processo di creazione della moneta ha concorso ad alimentare alcuni miti intorno al concetto di “moneta fiduciaria”. Riteniamo quindi opportuno e necessario tentare il debunking di tali miti.
    Voting 0
  9. -,8599,1852254,00.html
    Voting 0
  10. -
    Voting 0

Top of the page

First / Previous / Next / Last / Page 1 of 2 Online Bookmarks of M. Fioretti: Tags: bretton woods

About - Propulsed by SemanticScuttle