reinhart15_Adam Drobiec_EyeEm_Getty Images_dollar notes

عودة نقص الدولار

Oct 24, 2016 Carmen M. Reinhart

كمبريدج ــ بعد نهاية الحرب العالمية الثانية مباشرة، دخلت عبارة جديدة المعجم الاقتصادي: "نقص الدولار". كانت الاقتصادات الأوروبية تحاول التعامل مع الأضرار الشديدة المرتبطة بالحرب ومجموعة واسعة من المعوقات التي كانت تثبط جهودها الرامية إلى إعادة بناء قواعدها الصناعية. وفي ذلك الحين، كانت الولايات المتحدة الجهة الوحيدة القادرة على توفير المعدات الرأسمالية اللازمة لإعادة التعمير. وعلى هذا فلم يكون بوسع الاقتصادات الأوروبية الحصول على المدخلات اللازمة لزيادة صادراتها من دون القدرة على الوصول إلى الدولار الأميركي.

ومع شُح العملة الصعبة (الدولار الأميركي أو الذهب) أو الافتقار التام إليها، وضآلة احتمال الحصول على الدولار من خلال عائدات التصدير، حاولت الاقتصادات الأوروبية تقليص عجز حسابها الجاري من خلال ضغط الواردات من الدول الأوروبية الأخرى (في الأغلب). وكان من المتوقع أن يؤدي ضغط الواردات إلى السماح لها بجمع القدر الكافي من الدولارات لشراء الواردات الرأسمالية من الولايات المتحدة.

ولكن لأن دولا عديدة وظفت نفس التكتيكات في بيئة حيث كانت مجموعة واسعة من ضوابط رأس المال قائمة وكانت أسعار الصرف الرسمية مربوطة بالدولار الأميركي، ازدهرت سوق عملة موازية. وارتفعت علاوة السوق السوداء (نسبة إلى سعر الصرف الرسمي) في أغلب الدول الأوروبية (واليابان) إلى عنان السماء خلال أوائل الخمسينيات، فبلغت مستويات نميل الآن إلى ربطها بالأسواق الناشئة "غير المستقرة".

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0 Comments on this paragraph, 12 Comments on this article

Mauricio Duran-Loriga Nov 5, 2016

The roots of such imbalances will remain untapped: global population (labour force) + technology improvements grow much faster than global aggregate demand.

This phenomenon is already true in expansionary cycles. But in recessionary cycles, the imbalance grows at the speed of light as while population and technology continue to grow, global aggregate demand contracts.

A debtor nation that loses its creditor's confidence in its ability to generate surplus ends up thirsty of foreign currency (dollars for the case). In such cases the dollar shortage acts as a perfect classical gold standard. The more the debtor country's currency devalues, the more pain this "gold standard" generates.

Gold supply is by nature limited. Dollar supply can indeed reach infinitum just by pressing a keystroke.

Globalisation has been essentially a deflationary phenomenon due to the inclusion of +2 billion people (mainly China, India and satellites), as the cheapest possible labour force (needed to supply western demanded goods at reduced cost).

This race to the bottom in wages worldwide results in a race to the bottom in currencies against the dollar.
QE works only of you are the only one in town playing that game. Ditto for devaluations. Devaluations were useful in a decentralised economy.

However the terms of the contract have changed into a one global economy with less decisions centers, the actors still play the old game expecting to achieve past results. Einstein anyone?

The main global oversupply and overcapacity is labour force. And growing. Global wage deflation, and hence the diminished ability of nations to produce enough income to buy dollars is becoming more permanent than most economists reach to understand.

Is thinking of deconstructing globalization unthinkable today? The Roman Empire, the Spanish Empire, the British Empire were all supposed to last forever, same as their corresponding (then reserve) currencies.

When the dollar shortages will turn more acute overtime, suffered by bigger developped nations, a new Marshall Plan might be established globally on a colossal scale, the dollar will be printed into oblivion and the monetary system will be reset, switching into a "superior" new reserve currency, the SDR maybe.

But until the extraordinary mismatch in global labour force oversupply is resolved, all "reserve" currencies will undergo acute shortages.

Central bankers wanting inflation in such an environment is the farce of our lifetimes.
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ishaq yusuf Oct 31, 2016

For us in Nigeria, the dollar shortage is exacerbated by the disruption in oil sale forecast no thanks to the activities of militants in the Niger Delata Region. In addition to this, we also failed to build a safety war chest during the oil boom due largely to political pressures from sub national governments. However, there is convergence of opinion to diversify the economy away from oil and expand export lines through policy framework, standardization of products and responsive fiscal policies in favour of infrastructural investments. This approach if sustained will see Nigeria firmly positioning itself as a strategic nation in global economy.
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Michael Muoio Oct 31, 2016

China will surely attempt to fill this void but their domestic issues may contain scale of their expansionist policies. Free money concentrates wealth, lards up balance sheets, misallocates capital in ways we will take years to discover.
The Fed has simply out done economic history this time---with the Schiller PE in excess of 26X....we are all about to get a hair cut of 30-40%----BUCKLE UP!
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Allan Bleiken Oct 31, 2016

AN EXCELLENT AND TIMELY ARTICLE
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Paul Hanly Oct 31, 2016

The "dollar shortage" is a symptom, the underlying problem is no sensible investment opportunity against which a bank will lend. China has grossly overinvested in capacity in most areas of tradable manufactured inputs and goods eg about 50% of the world steel making capacity.
The countries that are in trouble with purchasing general capital goods from overseas (US, China, Europe)are those that have pegs or managed floats and/or mainly commodity exports with relatively little industrialisation and a population/governmetnnot organised in a way which promotes capitalism on a broad scale.
There is no logic in establishing new steel making or automobile manufacturing (or other large scale manufacturing industry) in any country in the face of global excess capacity.
USD can be created by any commercial bank in the US by making a USD laon and depositing the USD in the borrowers account at that bank. A credit worth borrower can hedge their obligations back into a domestic currency in any semi developed country with a decent FX market. So there is no shortage of USD per se as they can be created out of nothing. (See bank of England paper on money creation: http://www.monetary.org/wp-content/uploads/2016/03/money-creation-in-the-modern-economy.pdf)
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Jason H Oct 30, 2016

Now the 100 trillion dollar question is can Reinhart now make the simple logical conclusion that the USA must run deficits to supply these dollar shortages? By definition a government deficit is a private sector surplus so it's an accounting fact the dollars need to be supplied to the private sector by government deficit spending. While we are at it can he also understand banks don't lend reserves hence the ineffectiveness of QE? The only limit to loans is qualified loanees not reserves in banks.

Mainstream economics is like astrology when there's astronomy staring at them with modern monetary theory (MMT) already clearly outlined explaining the real world rather than imaginary assumptions and models completely devoid of reality. Here's an explanation: http://www.forbes.com/sites/stevekeen/2016/02/12/hey-joe-banks-cant-lend-out-reserves/#634e73bb3faf
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Emilio Perez Oct 30, 2016

This is something that I have mentioned for a long time. First of all, the Dollar is not just a currency; but because of its powerful history and the stable democracy, it can also be considered almost a commodity like rice and sugar.
The shortage started with the financial bailout, a lot of the new "printed" dollars went to Banking and Wall Street. This created an inbalance in the flow of currency which can be appreciated in the current Dow average and middle class instability. Investors and banks are very happy as most of that money is not getting invested in industry but mostly shuffled around very fast among stocks; plus to make matters worst, there are a lot of Asian IPOs taking dollars away from the US and getting it invested in Asian industries.

The US is capable of increasing the money supply (printing) more dollars before becoming unstable (there is a formula on how much more can be printed) but in order for this to work, it must be invested into the middle class. Eventually you can reduce the m. supply and replace it with taxes, specially to WS. This investment in middle class will increase consumerism thus increasing imports of international goods.

The problem with China is to complicated but I do not think that the Americas and Europe trust them enough because it is a 1 party system.
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Robbie Jena Oct 30, 2016

That is because these countries do not know, how to adjust in to the Globalization system. We tried since 2003...hard heads did not go...thanks.
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Jimm Roberts Oct 30, 2016

Wither barter? It works fluidly where there is zero currency, not just dollars.
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Christopher williams Oct 25, 2016

The area to partially address the shortage of hard currency (not just the dollar but the euro and, yes, the yuan as well) in LDCs is for aid agencies, charities and family remittances to achieve the higher price in local currency by domestic clearing in both the remitting and receiving countries - with offsets of legal bids from industry for the hard currency.
As stated, this can mean the recipients who are most in need are not suffering what is often less than half the 'real' rate in local currency, while the banks (central or commercial) are making the profit.
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jagjeet sinha Oct 25, 2016

STRATOSPHERIC ASSET PRICES BASED ON THIN AIR - STATE INTERVENTIONS MUST NOT BE WASTED
Carmen
This is a watershed attempt to explain a phenomenon nearly as ubiquitous as development templates.
Unless the reasons for "dollar shortages" understood at its core, the remedy will remain elusive.

Asset Prices in many Emerging Economies have reached stratospheric levels, in tandem with NY/LON benchmarks.
Asset Prices are not sustainable - because the Valuation in Stock Markets is not derived from Export Exemplars.
Unlike FTSE 100 components - neatly 75 % Incomes are derived from Exports - the Indian Sensex components are different.
Indian Sensex components have reflected sales of Colgate Cadbury and Corollas WITHIN Indian Markets.
When the country needs DOLLARS, they have to look for traditional commodities - tea rice textiles.
Asset Prices, when "dollar shortages" arise, are vulnerable - much more than in NY/LON where the basis is different.

The Shareholders benefiting from such Asset Prices, in a hurry to cash in, join in The Capital Flight - eager to translate their gains.
China's appetite for Real Estate in The Anglosphere appears to have wiped out its Current Account balances.
The desire to cash in the gains, and transpose them into NY/LON Real Estate, adds to the "dollar shortages".

The third explanation is derived from the absence of liquidity programs in the Financial Architecture.
Absence of QE injections that stabilise Asset Prices - like in NY/LON - create very thin markets for these Assets.
Recourse to DollarCredits to stabilise Asset Prices - compounds "dollar shortages".
Should China follow the QE templates of NY/LON to stabilize its Property Prices - it will need trillions.
That don't exist - either within China or in Dollars.

IMHO, therefore, Emerging Economies MUST NOT attempt any QE injections to replicate NY/LON to stabilize Asset Prices.
Helicopter Money - QE INJECTIONS - will be utter waste, as the Asset Prices are unsustainable and built on thin air.
The Inequality created in their Economic Geography by Asset Prices in a few pockets - should be allowed to run aground.
Instead, State Interventions are better deployed in The Real Economics - Infrastructure Assets funded with Perpetuals.
The Perpetuals' coupon bearing capacity, perhaps predicated on Valuations created as a result of The State Interventions.

In a nutshell, any attempts to arrest Asset Prices in Pockets that caused Dollar Shortages in the first place, MUST BE DISMISSED.
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Jose araujo Oct 24, 2016

Mrs. Reinhart, congratulations on the piece. Now if you could take a step forward it would massive.

Dollar shortage occurs when it’s hard for countries to access credit, which should tell you that the final result of the trade and capital balance of a country is not a model but the result of several micro interactions.

So actually when a country increases debt, it’s not necessarily bad, it can just mean that investors trust the country. On the other had a country with reducing debt is not necessarily good since it can mean that the access to debt markets has been reduced.

You can see now how silly was your previous work on debt and growth….
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