There is indeed a banker's banker's bank - the Bank for International Settlements:

http://www.bis.org/about/index.htm

<i>"The Bank for International Settlements (BIS) is an international organisation which fosters international monetary and financial cooperation and serves as a bank for central banks.

The BIS fulfils this mandate by acting as:

a forum to promote discussion and policy analysis among central banks and within the international financial community
a centre for economic and monetary research
a prime counterparty for central banks in their financial transactions
agent or trustee in connection with international financial operations
The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People's Republic of China and in Mexico City.

Established on 17 May 1930, the BIS is the world's oldest international financial organisation.

As its customers are central banks and international organisations, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities."</i>

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The pegging system is a high cost system, it imposes unnecessary workload on the government. I agree with tim, the main reason of this is because countries are more concerned with their own development than the global development,

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I think terms of trade is basically calculated through two countries coming upon agreement so that both countries benefit from trade, (i.e. minimize opportunity cost). For example, if US' opportunity cost, domestically, to make a cellphone is 3 pizzas and Mexico's opportunity cost to make a cellphone is 2 pizza, domestically, then they will agree on terms in which Mexico imports 2 < terms of agreement < 3 in order for the US to benefit from the trade. Other factors are generally included to decide whether the opportunity cost is closer to 2, better for the US, or closer to 3, better for Mexico.

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Well, I agree that price levels are continuously increasing. However, that does not mean that we are doomed in the future from the ongoing rise in inflation rates because as we have learnt, one of the main macro goal is for the economy to establish a stable increase in inflation rates because as price levels increase, our nominal wages adjust to these changes and thus, the purchasing power is regained. I think that the problem with inflation is not its continous increase, but its unstable fluctuations in price levels that lead to confusion and disorder in the economy.

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I think it assumes that "there is such a thing as too much of a good thing". In other words, the more I have of something I like, the less happy each one makes me. Does that make sense?

The example I use is ice cream. I am willing to pay, like three dollars for one scoop of a really good ice cream, because that first scoop makes me REALLY happy. But for two scoops, I may be only willing to pay $4.50, because the second scoop doesn't provide me with as much utility as the first. The third? Maybe only $5, because by then my marginal utility is really low, equal to only about $0.50. Get it? Too much of a good thing... my utility diminishes as I eat more and more ice cream!

Thanks for the discussion! Anyone else have examples of diminishing marginal utility?

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I'm sure there are determinants that shift the investment demand curve, just like every other curve we have learned about so far. Like Jennifer mentioned, some of these might include changes in operating costs, business taxes, technological advance, and expectations .

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It seems like Americans give more priority in the present, while Asians like to save up for the future. In addition to what others have said, this, I think, also depends on the countries' economic stability. For example, in America people generally acknowleges that there always is up-and-down in the economy, and during its recession, knowing that the phase will one day be turned, Americans do not worry much about saving more. But in Korea, for instance, people save more and more becuase their economy is not as stable, and then want to prepare for such recession since they are not sure how bad the recession will be and how long it will last. So I think this is another reason why Asian countries have more marginal propensity to save.

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So, things that can be done are 1) reduce taxes (least effect) 2) increase government spending aka create deficit budget by borrowing money from other countries 3) inflation = more foreign spending and foreign investment in the U.S. 4) increase consumer confidence by having the president appear in front of national television; i.e. "My fellow Americans, may God bless you all, may God bless our economy, my God bless oil, may God bless the War in Iraq, may God bless John McCain 5) negotiate oil prices in the Middle East by halting the current war.

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