Financial Crisis, the International Monetary System and the Challenge of the Emerging Economies

Even as in the debate over the current financial crisis there is a general agreement on the role played by foreign capital inflows into the United States –that, together with financial deregulation, allowed for an excessive increase of credit in that country–, we think that their importance has not been totally recognized, nor their link with the asymmetrical organization of an international monetary system that uses de dollar as a reserve currency, nor their relationship with the economic growth model adopted by the US during the last thirty years, which relied on the increase of credit-financed households’ expenditure in order to maintain its dynamism, and that was able to keep inflation down by importing cheap foreign manufactures, at the cost of a fall in the profitability of its own manufacturing sector. We suggest here that the crisis has to do with the impossibility of indefinitely keeping this type of economic growth, and that a way out will require a radical reform of the international monetary system, as well as a general increase in economic efficiency.