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Financing for development and the post Keynesian case for a new global reserve currency
Author(s) -
Hudson David
Publication year - 2010
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1724
Subject(s) - economics , liquidity preference , market liquidity , liberian dollar , currency , deflation , reserve currency , global imbalances , volatility (finance) , context (archaeology) , post keynesian economics , international finance , financial crisis , monetary economics , international economics , monetary policy , exchange rate , macroeconomics , finance , current account , devaluation , paleontology , biology
In the context of the current financial crisis the article returns to the Keynes's plan for an international clearing house. In exploring the intellectual basis for Keynes's economics—namely uncertainty and liquidity preference—the article identifies the anti‐developmental characteristics of US dollar‐based international monetary system: (1) financial volatility and recurrent crises, (2) costly excessive international reserves, (3) the fundamental asymmetry of a system in which developing countries finance the US. Collectively these result in global deflationary tendencies which are caused less by a lack of liquidity than systemic inefficiencies. Keynes's plan for international monetary reform offers a solution to all of these problems. Copyright © 2010 John Wiley & Sons, Ltd.