Mexico matters. In addition to being our southern neighbor, Mexico is our third largest trading partner, after China and Canada. It is ranked as the 15th largest economy in the world. On Sunday the country experienced a seismic change in leadership. Fueled by anger at violence and corruption, Andrés Manuel López Obrador, the 64-year old populist center left candidate best known as AMLO, was elected by a clear majority in all but one state and a simple majority in both houses. He had promised to Make Mexico Great Again.
There was a basic flaw in the Vollgeld “sovereign money” proposal rejected by the Swiss in a referendum last Sunday. An arrangement that gives the state or its agencies exclusive power to create money, oversee bank accounts and direct lending to the economy is hostile to capitalism. It cannot produce the assurance needed to allow the process of rational monetary calculation that is the essence of capitalism. This was pointed out by the sociologist Max Weber in 1922. Geoffrey Ingham of Christ’s College Cambridge sums up Weber’s conclusion as follows:
The IMF/World Bank held their Spring Meeting in Washington. The IMF issued the semi-annual updates of its two major reports-the World Economic Outlook (WEO) and Global Financial Stability Report (GSFR). In these reports, the IMF remained upbeat about the short-term outlook for the global economy, but warned about rising downside risks, especially in the medium- to long-term.