How to analyse these developments.
1. I suggest we need to see the dollar-euro conflict as a contradiction in which there is both unity and struggle. If we analyse them mechanically as separate, or mechanically as together, we will not be able to follow the ebbs and flows.
To give a specific example: yesterday the Independent (London) led with the headline "US warns Europe to cut rates".
This was Robert Rubin the previous day warning Europe to take urgent steps to stimulate domestic demand and bring down trade barriers. "Such measures might include further interest rate cuts and reduced taxes." But Duisenberg said there was no need to boost Euro economies with lower interest rates.
What is happening here is a complex process which is both communication signal and conflict.
2. There are some theoretical suggestions worth pondering in Chapter 3 of Capital on the centuries old conflict between gold and silver. "In fact in countries in which both metals are legally measures of value, and therefore both legal tender, so that everyone has the option of paying in either metal, the metal that rises in value is at a premium, and, like every other commodity, measures its price in the overvalued metal which alone serves in reality as the measure of value."
I interpret events with the dollar and euro cautiously to be consistent with this. As a store of value the euro has quickly made inroads into the dollar.
As a means of circulation, the dollar, as the overvalued currency, will continue to be used, thereby subsidising the USA, and allowing the USA to compete with the other imperialism with a weak dollar policy. (Paradoxical interpretation, but I submit, arguable).
What alters the comparison with centuries of gold and silver rivalry, is that now the function of a measure of value can be even more separated from that of a means of circulation. It is possible to designate the computerised circulation of money in either dollars or euros, and some of the larger companies in the UK for example are starting to do certain computer accounts in euros.
I suggest with rapidly changing technology, how the function of the measure of value, interacts with the store of value, and the medium of circulation, will be complex and interesting. Although I do not predict implosions, we can be sure that the situation will not remain static. Any more informed comments??
Chris Burford
London