The Political Economy of Civilization
The spectre of several international debt problems haunts global capital markets. One problem is associated with the liabilities of the countries of Latin America, Africa, and the former communist countries of Eastern Europe. The other involves the international debt of the world's largest debtor, the United States. Conventional economic analysis has not been able to suggest how to resolve this complex relationship between the international debt level and currency speculation problems except to claim that, in the long run, a free market will solve all problems. Cooperation between governments is an important factor governing the ease and the terms upon which foreign exchange may be purchased. Depending on the degree of cooperation between the governments, the exchange rate may be either fixed or flexible. A fixed exchange rate system provides the international production and trading community with a Rosetta Stone for precisely translating values from one national money to another over the life of the contract.