21 Aug 2009

Stiglitz Knows Dollar Crash Is Coming, Too

All Posts No Comments

As CNBC reports:

A new global reserve system is needed after the global financial crisis exposed the U.S. dollar-based system as flawed and risky, Nobel Prize-winning economist Joseph Stiglitz said on Friday.

The “dollar now is yielding almost zero return,” Stiglitz said in a speech at the United Nations regional headquarters in Bangkok. “The current global reserve system is fraying. It’s falling apart. The issue isn’t whether we go to a new system.

The question is do we do so in an orderly or disorderly way.” The build up of the U.S. deficit, debt and “the boiling up of the balance sheet” is cause for anxiety, he said.

But don’t get excited, Stiglitz isn’t a Free Advice reader:

Stiglitz urged rich nations to provide funds to help poorer countries avoid a steep crash during the financial crisis.

The group has called for global coordination to avoid competition to cut taxes, and for a worldwide increase in tax on high earners. Dubbing itself the “Shadow GN,” the group has urged governments to opt for bank nationalisations rather than bailouts in order to drive the pace of fresh lending.

Comments are closed.