Lynn Williams is the first person that I know of who made the connection between the value of the dollar in foreign exchange and American industrial recovery. Lynn was patiently explaining this to steelworkers in the mid 1980's---while Mr. Neutron John was out there "getting rid of people and leaving buildings standing".
Fraternally, Tom Lehman
Doug Henwood wrote:
> Peter Kilander wrote:
>
> >I see your 3 and raise you 2. But seriously, I read with interest your
> >editorial in The Nation, "The Bull's Sour 16". I have a dumb question: who
> >does the U.S. owe $1.8 trillion? Japan, mostly? Couldn't they call in their
> >chits in order to help themselves out of the mire? The U.N.? Don't we ignore
> >them anyway?
>
> Japan, China, Taiwan, and other countries like that with big reserves hold
> them mainly in U.S. Treasury paper. Also, if offshore hedge funds take a
> position in U.S Treasury bonds, this shows up as a foreign claim on the
> U.S. even though the hedge fund managers may physically be in the U.S. The
> Treasury has numbers on who buys the bonds initially, but if they sell them
> (as they usually do - the average holding period on a long-term T-bond is
> about a month), it's hard to tell where they end up.
>
> Actually, Japan's holding of Treasury paper my increase as their markets
> are deregulated. Why keep money at home in a depressed economy with
> interest rates flirting with 0 when you can get 5.5% on U.S. Treasuries? Of
> course, if the dollar reverses trend and starts sinking, the 5.5% may look
> like a bad joke.
>
> >What do you think of Cockburn/Brenner's analysis that the boom has depended
> >partly upon a decade-long devaluation of the dollar against the yen and
> >deutsche mark? Anybody else?
>
> I haven't read Brenner's piece yet. There's probably some truth to the
> dollar thesis, and if it's true, we should start seeing the U.S. "boom"
> unravel. Virtually every currency in the world has been losting value
> against the $ lately. GE boss Jack Welch says the revival in U.S.
> manufacturing is largely a product of a weak dollar in the late 1980s and
> early 1990s.
>
> I'm persuaded by Anwar Shaikh's argument that in the long run, currency
> values are determined by relative productivity growth. The long post-WW II
> decline in the dollar's value can be explained by rapid Japanese and
> Western European productivity growth, as they closed the gap in absolute
> productivity levels with the U.S. A devaluation that merely reflects weak
> productivity growth is a pretty dubious stimulus. According to the IMF,
> U.S. productivity growth from 1990-99 (obviously the 1998 and 1999 numbers
> are estimates) will average 3.0%, twice Japan's 1.5%, but still behind
> Germany's 4.6%, France's 4.0%, and "other advanced economies" (rich
> industrial countries other than the G-7) at 3.6%. The EU's average of 3.4%
> is also ahead of the U.S. So it seems that while the days of the U.S.
> coming in near the bottom of the productivity sweepstakes are past, neither
> is the U.S. on top of the world as you might think from reading the papers.
>
> The IMF productivity measures differ wildly from those published by the
> U.S. Bureau of Labor Statistics. Inquiries to both the IMF and the BLS
> about why this is have gone unanswered.
>
> Doug