TEXT OF INTERVIEW
BILL RADKE: Let’s welcome Jane D’Arista with the Political Economy Research Institute at the University of Massachusetts, Amherst. She joins us live. Hi Jane.
JANE D’ARISTA: Hi. Good morning. Thank you.
RADKE: So the International Monetary Fund just met over the weekend. They talked about this global edginess over competing currencies. Very simply, Jane, what’s the issue?
D’ARISTA: Well the issue is that the price of a currency — how much it takes you to buy another currency — is very important. It affects the price of the goods you try to sell in the market and if your currency is overvalued, it means that you’re not going to sell as many goods at home. And what that means for the United States — as it has meant for a long time — is that you’ve got your reduced wages and cut jobs and that’s something that we have experienced. Other countries are very concerned now because it is affecting them as well. And these are countries that depend upon exports for growth, what we call export-led growth. And we know, of course, China and Japan and Germany and Brazil and others are very dependent on this form of growth.
RADKE: So everybody wants to export, how do you solve that dilemma?
D’ARISTA: So the United States ends up being the buyer of last resort, as we have been or many years now, amassing this huge trade deficit, which we know is unbalancing the world and we are concerned about. The great threat here is the tensions are mounting. The currencies, people are trying to get their currency down and that is a competitive situation. It really doesn’t help anybody. In the end, what we have to do is go to the root of the problem — not slap tariffs on, not exacerbate the problem, not create additional tensions, but figure out how can we create a system where we don’t have a key currency that always has to be the buyer of last resort, and nobody except the U.S., of course, wants to do this.
RADKE: Jane we’re going to have to keep following that. Thanks for putting that in a nutshell for us this morning. Jane D’Arista [with the] Political Economy Research Institute at U Mass, thank you.
D’ARISTA: Thank you.
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