The dollar is depreciating vis-à-vis other currencies, including also the Mexican peso, and that does not square with a reserve currency.
Jesus Alberto Cano Vélez / Excelsior
We commented last week that the media seems to be the official currency is preparing for a new "Bretton Woods" to reform the system of international payments, both in terms of o reserve units, and the institutional system and its rules of operation.
And seeing what is happening with gold, sobering. First, price is rising for almost two years and after several central banks bought gold in recent times to increase its international reserves in this metal, including those of major countries, with Mexico among them.
Will we see the rebirth of the central role gold-only or shared, the new international monetary system?
recently commented Alan Greenspan, former chairman of the Central Bank of the United States, that the current global inflationary pressure had much to do with the use of a fiat currency, the dollar-and the case that the U.S. has a serious deficit balance of payments. He did not say, because it is their country, is that the emission of dollars to cover the payment of their deficits, without giving in return other property, no trust gave assurances that it will take steps to address its fundamental imbalance with other countries.
There is an excess of dollars circulating in the world, the "financial misconduct" in the U.S., while we are seeing the emergence of several centers "Megas" of world economic power, what it takes to U.S. monopoly as a source of reserve currency, which has enjoyed since World War II. And emerging economic powers do not necessarily share values.
Among them are China, India, and the single currency of the European Community, which could lead to volatility in international financial markets, if not assume the responsibilities inherent in being sources reserve currency.
The logic is clear. The dollar is positioned as the reserve currency in the decade of 40 of the last century, because all countries want to be the only means of international payment that everyone wanted, and also, potentially, the U.S., the only economy in global importance, which emerged from the war with its production plant intact.
But all that changed.
We're seeing the dollar is depreciating vis-à-vis other currencies, including also against the Mexican peso, and that does not square with a reserve currency. Which brings us to the consideration of the serious problem of the confidence factor, which should prevail in the official financial world and markets.
The gold standard, which was the system that lasted, with its unit of currency and reserves and the center of the system of adjustments between the balances of payments of countries for a long time-centuries-regulated including the maintenance of balance in balance of payments of countries and operated without the intervention of authority. That was good.
BUT, as nothing is perfect, had a serious problem in the way of restoring balance. For example, a country with a deficit balance was enjoying the production of others without paying for it with their own production. Therefore, it unleashed an automatic process of adjustment, because the deficit suffered reductions in international liquidity in its means of payment, money in circulation-which did reduce economic activity and price level in that country, because of the money in circulation had left the country to pay for imports surplus; which meant "politics" very painful deflation, because between the prices were lowered wages ... Politically very difficult.
One of the advantages of the Bretton Woods system, which replaced it-call "Keynesian" - allowed to return to balance of payments equilibrium by a devaluation of the currency of the deficit, increasing automatically import prices, because foreign currencies have become more expensive, and reducing domestic prices because the local currency becomes cheaper. In this system, the central bank of each country had other leeway.
Politically, it appears that China already sent messages about their dissatisfaction with the dollar as the central currency of the current system, calling the current system of dollar-based currency, "a product of the past", and suggest a new system that was "more just, equitable, inclusive and well managed."
how things stand now give up to international negotiations on monetary and messages that are sent to countries to see what can happen. Hopefully
touch him to Mexico to participate in the first level of the negotiations, as was the case in Bretton Woods. But what is certain is that the fate of our main partner will be essentially recessive, the adjustment process must continue, with very low growth for many years into the future.
we better change horses and develop our domestic market. This is the time. Has huge economic benefits and social justice.
would also be worth closer to our neighbor, Brazil.
National President of the National College of Economists *
Jesus Alberto Cano Vélez / Excelsior
We commented last week that the media seems to be the official currency is preparing for a new "Bretton Woods" to reform the system of international payments, both in terms of o reserve units, and the institutional system and its rules of operation.
And seeing what is happening with gold, sobering. First, price is rising for almost two years and after several central banks bought gold in recent times to increase its international reserves in this metal, including those of major countries, with Mexico among them.
Will we see the rebirth of the central role gold-only or shared, the new international monetary system?
recently commented Alan Greenspan, former chairman of the Central Bank of the United States, that the current global inflationary pressure had much to do with the use of a fiat currency, the dollar-and the case that the U.S. has a serious deficit balance of payments. He did not say, because it is their country, is that the emission of dollars to cover the payment of their deficits, without giving in return other property, no trust gave assurances that it will take steps to address its fundamental imbalance with other countries.
There is an excess of dollars circulating in the world, the "financial misconduct" in the U.S., while we are seeing the emergence of several centers "Megas" of world economic power, what it takes to U.S. monopoly as a source of reserve currency, which has enjoyed since World War II. And emerging economic powers do not necessarily share values.
Among them are China, India, and the single currency of the European Community, which could lead to volatility in international financial markets, if not assume the responsibilities inherent in being sources reserve currency.
The logic is clear. The dollar is positioned as the reserve currency in the decade of 40 of the last century, because all countries want to be the only means of international payment that everyone wanted, and also, potentially, the U.S., the only economy in global importance, which emerged from the war with its production plant intact.
But all that changed.
We're seeing the dollar is depreciating vis-à-vis other currencies, including also against the Mexican peso, and that does not square with a reserve currency. Which brings us to the consideration of the serious problem of the confidence factor, which should prevail in the official financial world and markets.
The gold standard, which was the system that lasted, with its unit of currency and reserves and the center of the system of adjustments between the balances of payments of countries for a long time-centuries-regulated including the maintenance of balance in balance of payments of countries and operated without the intervention of authority. That was good.
BUT, as nothing is perfect, had a serious problem in the way of restoring balance. For example, a country with a deficit balance was enjoying the production of others without paying for it with their own production. Therefore, it unleashed an automatic process of adjustment, because the deficit suffered reductions in international liquidity in its means of payment, money in circulation-which did reduce economic activity and price level in that country, because of the money in circulation had left the country to pay for imports surplus; which meant "politics" very painful deflation, because between the prices were lowered wages ... Politically very difficult.
One of the advantages of the Bretton Woods system, which replaced it-call "Keynesian" - allowed to return to balance of payments equilibrium by a devaluation of the currency of the deficit, increasing automatically import prices, because foreign currencies have become more expensive, and reducing domestic prices because the local currency becomes cheaper. In this system, the central bank of each country had other leeway.
Politically, it appears that China already sent messages about their dissatisfaction with the dollar as the central currency of the current system, calling the current system of dollar-based currency, "a product of the past", and suggest a new system that was "more just, equitable, inclusive and well managed."
how things stand now give up to international negotiations on monetary and messages that are sent to countries to see what can happen. Hopefully
touch him to Mexico to participate in the first level of the negotiations, as was the case in Bretton Woods. But what is certain is that the fate of our main partner will be essentially recessive, the adjustment process must continue, with very low growth for many years into the future.
we better change horses and develop our domestic market. This is the time. Has huge economic benefits and social justice.
would also be worth closer to our neighbor, Brazil.
National President of the National College of Economists *
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