The British prime minister, who is trailing the opposition Conservatives by more than 10 points in recent polls, believes that co-ordinated international action is the key to lifting the world out of recession, reports FT. This, of course, would mean co-ordinated inflation. Specifically, Brown has plans "for greater international regulation and reform of institutions such as the International Monetary Fund."
Interestingly, I attended the Ron Paul forum in Washington D.C. last Friday where he mentioned that he thought the insiders were planning a new reserve currency to replace the dollar. He specifically mentioned the IMF and World Bank as possible tools for such a currency. Could this be what Brown means by a greater roll for the IMF, the spearheading of a new world reserve currency?
Also on the agenda, according to FT:
Mr Brown wants to use this week’s meeting with Mr Obama to plan for the next stage in the war in Afghanistan.
British officials say the Obama administration has been making clear that it does not want the UK to send any troops to add to the 8,300 it has in southern Afghanistan. This is in part because the US is itself considering sending two ?brigades to Helmand to help the UK effort there.
“The UK has the second largest contribution to Afghanistan by far,” said another senior UK official. “We are taking a very high proportion of the casualties ... So I wouldn’t expect the US to look to the UK first when it comes to the issue of burden sharing.”
However, Mr Brown wants to hear directly from Mr Obama what the US wants from Britain before making a firm announcement back in the UK. Britain’s Ministry of Defence is actually lobbying to send additional troops to Afghanistan in order to underscore in the months ahead that it is playing a full role in Helmand alongside US troops.
UPDATE: UK's Timesonline is reporting that Brown while in the United States will call for a "Global New Deal". Brown meets with Obama on Tuesday and will address a joint session of Congress on Wednesday.
Timesonline reports:
The prime minister will borrow from the rhetoric of Franklin Roosevelt, who introduced the government-financed New Deal to tackle the US Depression of the 1930s. He will argue that his 21st century “global new deal” will also require public spending on a huge world-wide scale.(Note to all readers, be patient. Bob Murphy's book revealing the truth about the destructiveness of the New Deal will be out late this spring.)
Timesonline continues:
Aides say [Brown] has...to demonstrate to a sceptical British public that he commands the respect of the president...I thought this nonsense ended with Bush-Blair? Why would the Prime Minister act like the U.S. president is his Daddy? Sounds to me like the Brits need a Prime Minister with balls and free market instincts.
On the IMF currency, Michael Hudson laid out his theory on how this would develop in an interview with Eric Janszen of iTulip on April 7, 2008:
ReplyDelete"H: I think so. US strategists have been talking now for about thirty years regarding how to counter if and when foreign countries push back against our free ride. The answer is there is no way we can forecast when they will do so, until it actually happens. So we’re just going to keep on doing what we’re doing until there is counter-pressure. So far, there isn’t any counter pressure. The Americans have all sorts of contingency plans, but other countries have shown no apparent plans of their own. They merely respond, not initiate.
J: So what do you think US contingency plans are?
H: Essentially it will be the old paper-gold proposed via the IMF. It will tell foreign central banks, “Okay you have $3.5 trillion of dollar claims on the US Treasury. All we can do is pay you with new notes. But we have a way to solve your problem. (Note that we frame the issue as their problem, not ours.) You’ll turn over these US Treasury bonds to the IMF, and they will give you paper-gold certificates worth $3.5 trillion. These no longer will be liabilities of the US Treasury but they’ll be your assets with the IMF. So we can continue with a ‘clean slate.’ We won’t owe anything, but you’ll still have your $3.5 trillion in assets.” That’s the plan that the US is going to propose as a rescue for itself. A debt repudiation masked as IMF credit creation. They will call this “progress,” “innovation,” “reform” – all the usual euphemisms that are trotted out for such bailouts."
Of course, Hudson is no free market fan, but I often agree with his diagnoses and forecasts, just not his cures.