Ali’s blog

Mostly quant stuff with occasional digressions

The way forward?

Posted by alifinmath on January 23, 2008

A piece in Counterpunch with which I agree but which doesn’t tell me anything I don’t already know (and most of my readers will know this as well). Some US government (not this pack of morons) is going to have to clear the debris and chart a course of action. During the interim there will be massive bankruptcies and defaults — but that’s inevitable. There will have to be a new international framework regulating trade and financial flows — one in which the USA will have a reduced and humbler role. The US government will have to control its own trade and financial flows, and adopt a more protectionist stance as it slowly rebuilds its own technical and manufacturing capacity, slowly investing in infrastructure, education, and manufacturing capability. This will take decades. And it is the only way forward.

With regard to money, the US dollar may need a more solid footing. Since the time of Nixon, the dollar has been a fiat currency, and indeed, the origins of global financial markets — responsible for so much that ails us today — can be traced back to the early ’70s.

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