St. Petersburg, Russia, June 2009. The US is the biggest economy in the world, and if the blame for the global economic crisis is put on the US, it is put on the centre of the financial world – it is the same thing. The sub-prime mortgage crisis is certainly an American phenomenon that created the major problems, believes Robert Mundell, Professor of Economics at Columbia University and a Nobel laureate who gave an exclusive interview to RT at the St. Petersburg Economic Forum.
In Mundell’s opinion “The US Federal Reserve system and the Secretary of the Treasury made two big mistakes last fall. They allowed the dollar to soar in the third quarter last year – the dollar went up by 30% – and this was damaging to the US and … all those countries that were tied to the dollar, they had bad stock markets over that period. This was due to tight money, which you could prove by the appreciation of the dollar and also the falling price of gold, which went down by about $250 in that period. When those two things come together – the dollar goes up and the gold goes down a lot – then you know that there’s some tightness in the monetary system.”