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The falling US dollar increased in value as the crisis became publicly manifest, and that was because people sold other, less secure, forms of wealth storage -- their income producing assets -- in order to hold US dollars, which is simply a guarantee that US political authority (or EU or Japanese, etc.) will continue to reign supreme and guarantee the existing web of social relationships that currently determines who gets what in the world today.

Wasn't there another more prosaic explanation for the rise of the dollar, having to do with a suddenly urgent need to pay for huge amounts of dollar denominated debt?

The West won the world not by the superiority of its ideas or values or religion, but rather by its superiority in applying organized violence.

by marco on Wed Sep 2nd, 2009 at 10:15:39 AM EST
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