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FTR #126 The Euro, The Dollar, Currency Speculation and The World Economy

Lis­ten:
MP3 Side 1 [1] | Side 2 [2]

With the begin­ning of 1999, the Euro came into being as the cur­ren­cy for much of con­ti­nen­tal Europe. This event took place as the pos­si­bil­i­ties of a glob­al eco­nom­ic col­lapse con­tin­ued to loom large. In this pro­gram, a num­ber of aspects of glob­al eco­nom­ic and polit­i­cal con­sid­er­a­tions are ana­lyzed, draw­ing heav­i­ly on arti­cles and analy­ses from The Finan­cial Times of Lon­don. After dis­cus­sion of how the Fed­er­al Reserve nar­row­ly avert­ed a finan­cial col­lapse in 1998, the broad­cast focus­es on the unsta­ble state of the world econ­o­my. Russ­ian debt default, Brazil­ian eco­nom­ic insta­bil­i­ty, the role of cur­ren­cy spec­u­la­tors and the role of IMF are among the fac­tors ana­lyzed. Most impor­tant­ly, the pro­gram dis­cuss­es the strong sta­tus of the Euro and the vir­tu­al cer­tain­ty that it will sig­nif­i­cant­ly chal­lenge the dol­lar as the reserve cur­ren­cy of choice — an event that pos­es a grave threat to the econ­o­my of the Unit­ed States. Key Finan­cial Times arti­cles read into the record in this broad­cast high­light the prob­a­bil­i­ty that cur­ren­cy spec­u­la­tion between the dol­lar and the Euro may prove extreme­ly attrac­tive to investors and dev­as­tat­ing to the Amer­i­can and glob­al eco­nom­ic sit­u­a­tion. There is a strong pos­si­bil­i­ty that the U.S. econ­o­my and cur­ren­cy may be vul­ner­a­ble to the same type of spec­u­la­tive forces that dev­as­tat­ed Asia in 1997–98. A key point of analy­sis notes that the tran­si­tion from the pound to the dol­lar as the world’s main cur­ren­cy in the after­math of the first World War was one major fac­tor that pre­cip­i­tat­ed the Great Depres­sion. Much of the broad­cast reviews mate­r­i­al [3] ana­lyz­ing the EMU as the real­iza­tion of the pro­pos­al of Pan-Ger­man the­o­reti­cian Friedrich List. In the 1840s, List pro­posed a Euro­pean eco­nom­ic union, dom­i­nat­ed by Ger­many, as a vehi­cle for Ger­man world dom­i­na­tion. (Record­ed in Jan­u­ary of 1999.)