The Dollar Crisis: Causes, Consequences, Cures by Richard Duncan

Author:Richard Duncan [Duncan, Richard]
Language: eng
Format: epub, mobi, pdf
Publisher: Wiley
Published: 2011-10-30T14:00:00+00:00

CONCLUSION

Existing policy tools are likely to prove to be incapable of resolving the current global economic crisis. Keynesianism and monetarism have both been too abused during the preceding decades to be effective now. Similarly, bailing out the depositors of failed banks may solve one set of problems by preventing a collapse of the money supply, only to produce another set of problems by perpetuating the excessive pool of credit that was responsible for causing the crisis in the first place.

If some variation of a protracted, 1930s-type deflationary depression is to be avoided (without resorting to war or hyperinflation), then a new policy fix suitable to the current post-bubble economic environment will have to be devised (see Figure 8.21). Part Four of this book offers some recommendations that could boost global demand in our new global economy without relying on either fiscal or monetary stimulus. First, however, Part Three examines why the global economy cannot avoid being dragged down into a severe economic slump by the recession in the United States and the inevitable collapse in the value of the dollar.

Figure 8.21 United States: Consumer prices, 1914–40 (% change year-on-year)

Source: U.S. Bureau of Labor Statistics, Consumer Price Index – All Urban Consumers.

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