Comments on: The Fed and America’s Distorted Expansion http://www.thomaspalley.com/?p=85 Economics for Democratic and Open Societies Tue, 07 Sep 2010 02:47:53 +0000 http://wordpress.org/?v=2.6 By: TOM PALLEY http://www.thomaspalley.com/?p=85#comment-63856 TOM PALLEY Sat, 15 Sep 2007 18:34:45 +0000 http://www.thomaspalley.com/?p=85#comment-63856 Hi Steve, Thanks. The economy clearly has some self-adjusting mechanisms and exports are part of that. However, (1) the export boom is relatively small in total and coming late in the day. It's doubtful it can offset the negative effects of the sub-prime market bust and house price deflation. (2) Trade deficit adjustment is being undermined by China's refusal to adjust its exchange rates. Consequently, while adjustment is taking place against the rest-of-the-world-x-China we're still bleeding versus China. Best, Tom Hi Steve, Thanks. The economy clearly has some self-adjusting mechanisms and exports are part of that. However, (1) the export boom is relatively small in total and coming late in the day. It’s doubtful it can offset the negative effects of the sub-prime market bust and house price deflation. (2) Trade deficit adjustment is being undermined by China’s refusal to adjust its exchange rates. Consequently, while adjustment is taking place against the rest-of-the-world-x-China we’re still bleeding versus China. Best, Tom

]]> By: marc pilkington http://www.thomaspalley.com/?p=85#comment-63814 marc pilkington Sat, 15 Sep 2007 09:40:19 +0000 http://www.thomaspalley.com/?p=85#comment-63814 Thomas: I agree that the Fed has tacitly endorsed the so-called corporate globalisation paradigm. Any paradigm shift (which you do not make quite explicit, I'm afraid) is no longer a US macro policy choice though. The emergence of transnational corporations calls for a reflection on optimal currency areas, exchange rate management and, of course, global governance. When we refer to corporate globalisation, there's no turning back at this stage, only specific global institutional adaptations... Thomas: I agree that the Fed has tacitly endorsed the so-called corporate globalisation paradigm. Any paradigm shift (which you do not make quite explicit, I’m afraid) is no longer a US macro policy choice though. The emergence of transnational corporations calls for a reflection on optimal currency areas, exchange rate management and, of course, global governance. When we refer to corporate globalisation, there’s no turning back at this stage, only specific global institutional adaptations…

]]> By: Bernardo Aito http://www.thomaspalley.com/?p=85#comment-63732 Bernardo Aito Fri, 14 Sep 2007 20:01:29 +0000 http://www.thomaspalley.com/?p=85#comment-63732 Hi to all, if you have any thoughts on what will the FED do on September, 18th on the light of the recent market turmoil, please feel free to leave your vote on my blog's poll at: http://www.thedailyeconomist.blogspot.com/ best, Bernardo Hi to all,

if you have any thoughts on what will the FED do on September, 18th on the light of the recent market turmoil, please feel free to leave your vote on my blog’s poll at:

http://www.thedailyeconomist.blogspot.com/

best,

Bernardo

]]> By: Stephen Schlaikjer http://www.thomaspalley.com/?p=85#comment-63287 Stephen Schlaikjer Tue, 11 Sep 2007 23:39:27 +0000 http://www.thomaspalley.com/?p=85#comment-63287 Tom: Enjoyed your latest description of the way the world works. How do you react to latest couple of months' data showing that US manufactured exports are rising, apparantly in response to strong growth overseas and a weakening dollar? (And thus even adding some fractional percentage to US GDP growth. ) Does this strengthen your conviction that the Fed--along with the rest of the US Government--has the policy paradigm all wrong? And/or does it suggest a built-in adjustment mechanism whereby the dollar has to weaken due to the imbalances that US macro policies have helped create, and the US manufacturing sector--in those areas where we have competitive advantage--will naturally recover? Tom: Enjoyed your latest description of the way the world works. How do you react to latest couple of months’ data showing that US manufactured exports are rising, apparantly in response to strong growth overseas and a weakening dollar? (And thus even adding some fractional percentage to US GDP growth. ) Does this strengthen your conviction that the Fed–along with the rest of the US Government–has the policy paradigm all wrong? And/or does it suggest a built-in adjustment mechanism whereby the dollar has to weaken due to the imbalances that US macro policies have helped create, and the US manufacturing sector–in those areas where we have competitive advantage–will naturally recover?

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