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

RELATIONSHIP BETNJEEN INFLATION AND UNEMPLOYMENT MACRO MODEL

In this paper we consider quantitative relation between two microeconomic categories: unemployment and inflation. Or, subject of research is macro-economic model which has who variables (unemployment and inflation). I...

GLOBALISATION AND MODERNISATION OF A TRANSITIONAL ECONOMY

Understanding the essence of globalization and its dramatic and contradictory processes is a pre-requirement of successful modernization of any transitional country. If global courses are considered from the economic poi...

Imperative of International Business and Management

Успешно међународно пословање се најчешће везује за компаније из земаља Тријаде. И поред тога, процес интернационализације и глобализације није могуће зауставити националним границама. Земље у развоју, као и неразвијене...

Limited Possibilities of Adapting the Economy of Bosnia and Herzegovina to the External Pressures of the Economic Crisis

The economic condition in Bosnia and Herzegovina (BiH) is dependent on the continuous inflow of money from foreign countries. Under the impact of the economic crisis, there is a reduction in foreign donations, remittances...

THE REFORM OF GOVERNMENT ACCOUNTING SYSTEM WITH THE AIM TO INCREASE EFFICIENCY IN OFFERING PUBLIC SERVICES

Approaching Bosnia and Herzegovina to European Union is requesting the harmonization of business not just in private but also in public sector with European models. The public sector is required to realize goals with low...

Download PDF file
  • EP ID EP43686
  • DOI -
  • Views 249
  • Downloads 0

How To Cite

Јован Б. Душанић, PhD (2010). IDENTIFYING THE ESSENTIAL FACTORS OF GLOBAL CRISIS – CONDITION FOR UNDERTAKING ADEQUATE MEASURES FOR OVERCOMING THE CRISIS. Acta Economica, 8(12), -. https://europub.co.uk/articles/-A-43686