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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: orkrious who wrote (200956)10/29/2002 7:44:24 PM
From: Mark Adams   of 436258
 
After I posted that, one difference I noted was the fixed vs floating exchange rates.

Part of what contributed to the seize up there (IMO only) was the attempt to maintain the currency peg beyond it's useful life, which likely ended with Brazils deval. Then they tried limiting a run on dollars to protect reserves, and then freezing bank deposits altogether.

The US situation would be a bit different, I think, as the dollar would decline and foreign held debt would be harder to pay off unless dollar denominated. Imports would be more expensive. Services might deflate, as household discretionary funds diminish.

To some extent, the pain would be shared on a global basis, due to foreign investment and holdings of US assets.

I hear that China has become a large attractor of FDI. Perhaps this will gradually bring about the adjustment of exchange rates, and externally enforced austerity.
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