Behind the latest dollar slide
Socialist Press1978 1978-11-08Read it in the scan (PDF), scan page 4 →
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$500,000,000,000! That is the number of dollars outside the borders of the USA.
That astronomic sum is a measure of the scope of American imperialism and of its crisis.
.It exists because US capitalists have for decades invested billions of dollars a year around the world.
As ..well as breeding profits and power, this investment has also spawned a vast liquid dollar reserve in the form of a world currency. This sum has been augmented because the gigantic overseas costs of policing the world for capitalism add to a vast and growing balance of payments deficit.
This year 35 billion dollars ($35,000,000,000) will be added to existing overseas dollars.
The decline investment in the capitalist crisis has made more and more of these dollars unwanted.
Their exchange for more desirable currencies led to a steady two year long decline in the dollar's value.
When the Carter adminstration virtually disowned its currency at the beginning of October, this grew into a fever of speculation.
Thus the $500 billion consequence of US imperialism again threatened the economy which spawned it. • It became $500,000,000,000 not of imperialist strength but of weakness.
Not surprisingly none of Carter's economic measures -even his proposed control of wages-had any impact on the speculation except to make it worse.
No wonder Carter and the US Federal Reserve (Central Bank) made it clear they not only would not support th : falling dollar with other currencies but could not do so, because they do not hold the foreign currency.
Carter's neglect of the dollar's slide was, therefore, a dramatic symptom of the economic weakness of US capitalism.
But the neglect was probably exaggerated as a tactic with which pressurise the financially stronger capitalist countries (especially Japan, West Germany and Switzerland) to come to the dollar's aid.
This in the end they did, last week. The massive inflow of dollar reserves to these countries threatened, through expanding the money supply, to provoke new inflation in their own economies.
But it took an agreement with these countries to mobilise $30,000,000 worth of the surplus currencies (yen, deutschmarks and francs) to buy dollars before the slide could be reversed.
But for how long? This massive and unprecedented sum is still a mere 6% of the dollars in the world which