Forex Queries

            One of the givens of a multinational power is that it cannot default on its debt. There are an almost infinite number of refinancing schemes available when one controls the currency with which the debt is repaid and the moody supply from which repayments are made. (By contrast, when a Third World nation cannot repay its debt to the United States, its alternatives are limited. Since the debt is invariably denominated in dollars, a Third World nation gains nothing by printing an infinite amount of its own currency; it only creates hyperinflation.

          Without this alternative, its only recourses are to vastly increase its exports, to take out further loans from other nations-which are understandably reluctant to lend to a country that has defaulted on earlier dehtsor to reschedule its debt-repayment plan.)

          The increasing incentive is for foreign capital actually to take over U.S. production facilities-from farms and factories to financial services and stockyards. This certainly occurred in the 1980s. But it is unlikely to happen again-at least on an equivalent scale-if the dollar steadily declines. If dollar profits cannot be taken out of the United States at a favorable rate, foreign investors will find it difficult to justify new purchases of U.S.based assets.

             Can the United States become accustomed to being a partner among equals in the global economy-or are we locked into a leadership role, even if the role is meaningless and the leadership is lacking? There is no agenda for the dollar. And even if there were, we would not have any means of implementing or enforcing that agenda. Not only that, there are no meaningful plans to enact new policies-or, for that matter, to develop fiscal and monetary policies that will benefit the United States and, in the long run, the world. In theory, the initiative for new resolutions on global currency issues could come from the United States. But the United States in its current weakened economic position has no way to launch those initiatives without incurring a political risk.