Wednesday, June 1, 2011

Financial Times Blows One - Or Benn Steil and Manuel Hinds Miss a Little Fact

I’m not an economist. Fortunately.  But, since I am involved in business I like reading the Financial Times because a) it gives a non-US centric view of the world; b) does not have the knuckle-dragging editorial policy of the WSJ; and, c) is printed on pink paper.

This is a truly an astonishing mistake (behind free subscription wall).  Benn Steil and Manuel Hinds claim that if the US Dollar were to lose its reserve currency status, then “the Federal Reserve would…be forced to operate under external constraints...[T]he US would no longer be able to cover its current account deficits just by conjuring dollars, it would also have to issue debt in euros...”

I expect this sort of idiocy from the moth-brained Republicans in the US and particularly from the insane right wing, but not from the FT.  Does the UK have this “constraint”?  How about any country in the Eurozone?  Since when does reserve currency status dictate whether or not debt could be covered with the national currency?
What colour is the sky on their planet?  And what was the FT thinking in letting this 1000% piece of inaccuracy go to press?

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