IDENTIFYING THE ESSENTIAL FACTORS OF GLOBAL CRISIS – CONDITION FOR UNDERTAKING ADEQUATE MEASURES FOR OVERCOMING THE CRISIS
Journal Title: Acta Economica - Year 2010, Vol 8, Issue 12
Abstract
Current global economic crisis is neither conjuncture nor a cyclic one, but rather a serious systemic crisis, which roots lay in the Breton-Woods (1944) decision to let the American currency – US dollar become world’s reserve currency, and to let Fed guarantee the full convertibility of the US dollar into gold. The USA, however, could not resist the temptation to abuse the chance they were given, and they started paying for imported goods in dollars without adequate cover (in gold). Finally (in 1971) USA unilaterally gave up on the undertaken obligation and quitted the convertibility standard. In that way we reached a situation, in which USA supposedly managed to find the magic formula, which alchemist were seeking for centuries – to create gold out of nothing. Americans were now able (with help of their political, military and economic power) to acquire huge material goods from all over the world by mere dollar-printing. In order to satisfy growing ambitions, USA undertook measures to widen the area where US dollar is used, either by: 1) New territories, or 2) New methods of commerce. Later, thanks to the globalization, the US dollar became present in the whole world, and taking into account that the aggregate amount of material goods is limited, the new period emerges where new "virtual" instruments are made, which are being traded on financial markets. Through speculative operations (virtually out of a mere air) a big bubble has been inflated over time, or to put in other words a huge mass of financial assets has been created which has a manifold higher valuation than the actual value of the real sector economy. When the bubble burst we faced the current crisis, from which now we seek the exit. Measures undertaken by world leading economies and the USA in first place (flooding the markets with money and lowering the interest rates) seem like extinguishing fire with petrol. It is hard to believe that the very same measures which cause the problem could also solve it. Causes of current global crisis are more deep-rooted and reach deeply into morality and spirituality, so it is not sufficient to look for the exit from the crisis solely in economy.
Authors and Affiliations
Јован Б. Душанић, PhD
Keywords
Related Articles
- EP ID EP43686
- DOI -
- Views 261
- Downloads 0
ECONOMIC FREEDOM AND DEVELOPMENT OF SMALL COUNTRIES
Economic freedom is an important prerequisite for achieving economic growth and development, especially for small countries that do not have the bargaining power for anti-liberal economic policies, nor can they determine...
The impact of austerity measures on economic growth in the Eurozone
have a more severe compliance of the Maastricht fiscal criteria. Requirements for implementation of austerity measures are contradictory to the Keynesian central preposition which says that the right time for austerity i...
Protection and Safety of Information Systems in Modern Business
This paper has been written in order to provide a complete insight into computer criminal presenting the subject which increasingly causes the attention of the public in our country and worldwide. The aim of this paper i...
EPISTEMOLOGY OF MARKETING
Through genesis of marketing, which covers its pragmatic and scientific development, this paper work presents basic characteristics of position that sees marketing as pragmatic activity and position which sees marketing...
INFORMATION AND INFORMATION TECHNOLOGIES FOR BUSINESS DECISION-MAKING
This work shall deal with the information that is used as resource for business decision-making, information technologies, information systems and the process of decision-making based on models. Information is a resou...