Ilustração: domínio público
The
Inevitable Collapse of the Dollar
November 16th, 2009 
by
Len Hart, The Existentialist Cowboy
Americans live beyond
their means, Asia finances it and China props up the buck so that the US can
buy Chinese made stuff at Wal-Mart. Eventually the Asians/Europeans will stop
financing the USA, China will pull the plug on the buck and the bubble will
burst.
The CIA's World Fact Book lists
the US at the very bottom of a list with the world's largest negative Current
Account Balance. China, which pegs the Yuan to the dollar, is at the top with
the world's largest positive Current Account Balance.
If the GOP had been
correct, US exports should have risen! The 'balance of trade deficit' i.e, the
NEGATIVE Current Account Balance would have been reduced! If the GOP had been
correct, the US could have paid off huge amounts of national debt run up in
incompetent and dishonest GOP regimes. The US might have survived decades of
conservative budgets which forced the US to borrow from other countries. But
--not surprisingly --things have not worked out as the GOP would have you
believe.
Many
economists, myself included, believe that China’s asset-buying spree helped
inflate the housing bubble, setting the stage for the global financial crisis.
But China’s insistence on keeping the yuan/dollar rate fixed, even when the
dollar declines, may be doing even more harm now.
Although there has been a lot of doomsaying about the falling dollar, that
decline is actually both natural and desirable. America needs a weaker dollar
to help reduce its trade deficit, and it’s getting that weaker dollar as
nervous investors, who flocked into the presumed safety of U.S. debt at the
peak of the crisis, have started putting their money to work elsewhere.
But China has been keeping its currency pegged to the dollar — which means that
a country with a huge trade surplus and a rapidly recovering economy, a country
whose currency should be rising in value, is in effect engineering a large
devaluation instead.
It was hoped that by
taking the dollar off the gold standard, US products would enjoy greater sales
abroad. But like 'trickle down theory', it just has not worked out as planned.
The CIA's World Fact Book proves it.
The
enormous scale of foreign borrowing and money creation necessary to finance
Washington’s wars are sending the dollar to historic lows. The dollar has even
experienced large declines relative to currencies of third world countries such
as Botswana and Brazil. The decline in the dollar’s value reduces the
purchasing power of Americans’ already declining incomes.
Despite the lowest level of housing starts in 64 years, the US housing market
is flooded with unsold homes, and financial institutions have a huge and rising
inventory of foreclosed homes not yet on the market.
Industrial production has collapsed to the level of 1999, wiping out a decade
of growth in industrial output.
If the US is a 'failed
state', it is because it has been impoverished by at least two trends: 1) the
transfer of US wealth upward to just one percent of the US population which now
owns more than 95 percent of the rest of the nation combined; 2) the decline of
the US dollar, a trend begun when Richard Nixon eschewed the Bretton-Woods
agreement.
Reducing the chances
that we will weather this crisis are US wars of aggression which benefit only the
defense contractors. Wars, in fact, reduce the GDP, destroy jobs, reduce
productivity, and increase the trade deficit! If wars are so 'bad' for the
economy, then how are they sold so easily? Why are they 'sold' at all? The
quick response: they are sold with focus group tested bullshit!
There's a 'living' in
killing, we are told! It's a lie -- snake oil for idiots and rank and file GOP.
That wars are good for the economy is just a bald-faced lie cooked up by the
defense lobby for whom killing IS a living but only for the shrinking one
percent who benefit: the Military/Industrial complex.
In
fact, most models show that military spending diverts resources from productive
uses, such as consumption and investment, and ultimately slows economic growth
and reduces employment. In this way, military spending is comparable in most
models to any other form of government spending, such as spending on public
goods or improving the environment.
This paper shows the projections of the impact of an increase in annual military
spending equal to 1 percent of GDP (approximately the actual increase in
spending compared with the pre-war budget) of the Global Insight macroeconomic
model (see Appendix). The Global Insight model was selected for this analysis
because it is a commonly used and widely respected model.1 Other models will
show somewhat different projections, but it is unlikely that the direction of
the long-term impact on any of the key variables will be different. In fact,
because of the structure of the Global Insights model, it likely understates
the negative impact of military spending relative to other models.
The Inevitable Collapse of the Dollar
Americans are living beyond their means and Asia is currently financing that.
But eventually the Asians/Europeans will stop financing the USA and then the
bubble will burst.
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