Abstract:There has been a great deal of discussion recently over the use of exchange rates to ameliorate international imbalances. At the same time many developed countries have embarked a highly expansionary monetary policies, expanding the types and amounts of securities held on central bank balance sheets and attempting to use these purchased to alter the shape of the yield curve by buying medium and longer term securities. These two policies are inter-related since effective monetary expansion and zero short term i… Show more
“…These studies show the role of carry trade in exchange rate distortion due to interest rate differentials among currencies. Along this same line, Kregel (2010:1) argues that “derivatives contracts have been crucial in subverting the impact of exchange rates on the adjustment process and thus on the profitability of export firms in surplus countries.”…”
Section: The Fourth Dimension and Contemporary Capitalismmentioning
This paper seeks to address the central role played by derivatives markets in contemporary capitalism. It argues that these financial instruments have added several implications to the dynamics of capitalist economies, so that it forms a new sphere of accumulation here called the fourth dimension, with a new form of capital (the derivative form). In this new dimension, it is possible to observe three major changes compared to the previous dimensions. The first concerns the emergence of new property relations, marked by the separation between the ownership of assets and ownership of the rights on the performance of these assets. The second change relates to the new nature of the gain obtained in derivative transactions, here termed as casino gain. Finally, these changes create the conditions to consider a relationship of subordination of prior dimensions to the fourth dimension, which is consolidated when derivatives markets become the central locus for determining spot prices in key markets.
“…These studies show the role of carry trade in exchange rate distortion due to interest rate differentials among currencies. Along this same line, Kregel (2010:1) argues that “derivatives contracts have been crucial in subverting the impact of exchange rates on the adjustment process and thus on the profitability of export firms in surplus countries.”…”
Section: The Fourth Dimension and Contemporary Capitalismmentioning
This paper seeks to address the central role played by derivatives markets in contemporary capitalism. It argues that these financial instruments have added several implications to the dynamics of capitalist economies, so that it forms a new sphere of accumulation here called the fourth dimension, with a new form of capital (the derivative form). In this new dimension, it is possible to observe three major changes compared to the previous dimensions. The first concerns the emergence of new property relations, marked by the separation between the ownership of assets and ownership of the rights on the performance of these assets. The second change relates to the new nature of the gain obtained in derivative transactions, here termed as casino gain. Finally, these changes create the conditions to consider a relationship of subordination of prior dimensions to the fourth dimension, which is consolidated when derivatives markets become the central locus for determining spot prices in key markets.
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