From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Mon Jun 07 2004 - 17:37:56 EDT
At 2:51 PM -0400 6/7/04, Allin Cottrell wrote: >On Mon, 7 Jun 2004, Rakesh Bhandari wrote: > >> If governments could force the acceptance of a money merely by >> collecting taxes in it, then why do governments even bother >> borrowing money from abroad to finance their deficits? > >Governments borrow from abroad to finance external (trade) deficits. >They are not generally in a position to levy taxes on foreigners. > >Allin Cottrell yes I mis-stated the source of skepticism; perhaps I shall do so again. But why then--to take a presently important case--would foreign lenders be willing to accept that the debt be denominated in the currecy of the borrowers? I of course would not deny that state power can have something to do with borrowers successfully demanding such an arrangment, but it does not seem to be the whole story of why they have been able to pull it off. This arrangment would (or rather is) com(ing) under pressure to the extent that the borrowing country's profitability prospects dim. This would suggest that money is deriving its power from the claim that it represents over surplus value, not from a state's declarations. Yours, Rakesh
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