As far as economists go, I like Willem Buiter. Can't quite put my finger on it, but every now and then he gets to the root of the matter, and whenever anyone gets to the root of the matter in economics, you pretty much collapse all the theory that has been built on top of it. That's good and healthy for all concerned, except the
economic church and its priesthood.

The real root of all economics is accounting, because if you don't have
good numbers, it doesn't matter how fancy or elegant your equations.
This is a theme I've been harping on in regards to our banks. Buiter's piece
today(tx Yves S) is an excellent read on the topic. Now, one of the
great problems with the Soviet Union and other centrally planned states
is that fairly quickly accounting became useless, as everyone began
lying about numbers. Buiter writes,

Janos Kornai described at length, in Economics of Shortage,
his classic work on the internal contradiction of central planning, how
soft budget constraints became a defining feature of a centrally
planned economy and were central to its astonishing inefficiency and
eventual downfall.

The old communist regimes used to rail against "bourgeois" standards.
Well, our banking system's numbers today are so far from any reality,
we might call it "red accounting." Now there's a double entendre! This
is a great problem for both our financial system and our society. The
more our banks' books move toward infinity, the more valueless they are.

Speaking of valuelessness, we come to the dollar, which despite all
hype, is in less trouble than reported. Understand, everything comes
down with the dollar. So, if the dollar is going to have a cataclysmic
collapse, it will be the least of things you need to worry about. The
FT reports a number of Asian countries stepped in today to uphold the dollar's
value. Why? Because they have to. The whole corporate globalization
system of the past half-century is built on a strong dollar. But hey,
talking about the dollar puts it in play, and fuck the real economy,
when the dollar's in play there's plenty of money to be made by Wall
Street.

Currency shifts, such as have been talked about in recent days, quickly
move from the realm of finance and economics to the realm of history,
and as we all know, there is no history in economics, certainly not in
neo-liberal free marketeerism. The idea that our global financial
system, such that it is, can in any way conduct an orderly decline in
the dollar, isn't free market thinking, it's pure fantasy. The WSJ has
a good piece taking a more realistic view on the dollar issue.

Now, that all said, the dollar is going to have lose its role as global
reserve currency. But that means we and the rest of the world are going
to have to do things much differently than we do now, and our
economists have not a clue as to what that is.

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