Just say no to capital controls

Leading economist warns against repeating the mistakes of the past, points out dual pace of global economic growth

Published: 8 Feb 2013 at 00.00
Newspaper section: Business

Competitive devaluations and capital controls could prove as damaging to the global economy as the trade wars of the 1930s during the Great Depression, according to Daniel Murray, the chief economist for EFG Asset Management.

Infrastructure spending will help Thailand compete, says Mr Murray. APICHART JINAKUL

Capital controls, Mr Murray said, ultimately fuel "dysfunctionalities and inefficiencies", although he is optimistic that past mistakes will not be repeated.

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faranginkorat
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Discussion 2 : 08 Feb 2013 at 08.432
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Yes, QE is driving down the value (purchasing power)of the dollar faster than the PP of the THB is falling.However, it is not clear that this makes Thai exports more difficult because more valuable dollars don't do any good if nobody has any :-)
What will make Thai (and other countries') exports increasingly more difficult in the future (read "kill") is that the developed countries in general, and America in particular, are not exporting anything of real value to pay for the imports.
Sooner or later the rest of the world will realize that the US has simply been printing (electronically in most cases) money and exporting it.
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boons
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Discussion 1 : 08 Feb 2013 at 08.011
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Capital controls do indeed fuel dysfunctionalities. But so do hot money inflows. Both are deadly to an economy and to political stability.

The problem is that one cannot do nothing when everyone else is actively doing something.

As in the Prisoner's Dilemma, it is only the sub-optimal solution which insures survival. This is classic game theory, Mr. Murray doesn't get it.

He understands idealism and that nonsense some call "monetary theory". But he doesn't understand politics, survival or reality.
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Just say no to capital controls | Bangkok Post: business