>If you set up a currency board, your central bank becomes little more
>than a pretty building. By definition, you've given up all your
>autonomy in monetary policy. Who in her right mind would keep dollars
>in Argentina if, in the midst of a crisis, interest rates were
>lowered to 200 basis points below comparable U.S. rates? And if you
>change the parity level, you've broken your credibility bottle and
>spilled its contents on the floor. You can't have it both ways, Chris.
Obviously I take the thrust of the argument, if that is how the currency board is set up. Michael Hoover has clarified some further details for Hong Kong. My recollection was that there is an automatic mechanism that if the currency is not in demand interest rates rise. If I recall correctly this was a key feature of the currency raiders scam: they sold HK dollars, thereby forcing up interest rates automatically. This depressed the stock exchange and they were expecting to make a killing from buying short. Except that the government bought 13 billion dollars of shares. So the price of shares rose, rather than fell before settlement day. I accept BTW that Hong Kong's substantial national credit, does not come from the workings of the currency board.
Some of this is highly technical but then most schemes are. We are looking at various measures by which economically dependent countries try to have some measure of control over their local economies. It is enormously difficult. There are disadvantages as well as advantages to each scheme, and none on their own can reverse the powerful centripetal forces of global finance capital.
Each may be backed by particular political or class interests that fall short of the purely proletarian, just as the schemes fall short of full scientific socialism.
Nevertheless these different strivings, ultimately, and independently of the will of any individual, are attempts to reassert the claims of local living labour over global dead labour.
They repeatedly fail, and they repeatedly reassert themselves, and will do so until all the labour power of the world has migrated to the heartlands of finance capital.
Chris Burford
London