Finally, the end of US dollar supremacy is on us here in the United States. Was it inevitable? Sure. Was it inevitable that it happened in 2005-8? Absolutely not.
Economists, Politcal Scientists, Economic Geographers, and other policy makers and academics and students of said topics have known of this inevitable decline for many years – many. It is a topic that is commonly covered, at least at the collegiate level.
The theory is that the dominate global currency in any period is receiving a ‘free lunch’ (in econ-jargon). Once that country no longer dominates globally, the currency declines thus ending said free lunch. The free lunch results from being the most desirable currency to hold, even for foreigners.
It’s a historical trend that is trackable across centuries.
When a politician has the nerve to stand up and claim to not understand ‘economics’ – this is very problematic. This indicates an attitude of negligence toward key principles operating in the public sphere. We are talking about an admitted (and even proud) ignorance on issues that are widely understood.
Please tell me – why would you even want to be president if the economy is a topic that bores you? Shame on our current president and McCain for participating in an office while professing ignorance on the topic of ‘economics.’
Why Was This Decline Not Necessarily Inevitable at This Time?
Bill Clinton and his outstanding team of advisors, which included the very brilliant Robert Reich, actually managed to turn around some of the situations that were dampening the US late last century.
Perhaps most importantly, Clinton’s team did an outstanding job at keeping government spending in check. Also, the Clinton team was not negligent in taxation because it did not produce tax policies that clearly benefited the very wealthiest people. For instance, as Robert Reich recently pointed out – we only need to raise taxes (or rather – roll back Bush tax cuts) on the richest .5% of the population to deal with a government spending deficit.
These policies of strict fiscal management strengthen the dollar. By the time Clinton left office, it looked as though the US economy had founds it’s footing to lead in the new century.
While We Were Sleeping (Watching Fox News, Eating White Sugar and Buying SUVs)
Bushie et al could not have done a better job of ripping off the US public.
While we were growing increasing brain dead due to spending too much time commuting in cars (and sitting in dirty, brain-cell killing air) and drinking the cheap mortgage koolaid – the Bushies lied us into an unnecessary war in Iraq.
I have my own theories on why the US public laid down and rolled over during this period of incredible government corruption.
First, we probably shared a sense that large-scale corruption at the highest levels is not something that happens here. We really have been lucky for a couple hundred years it would seem. Yes, we’ve seen some scandals, but nothing on this scale.
Second, masses of the population drive cars. It’s seen as a ‘natural’ part of life. (If you don’t drive or own a car, people find that very odd).
For another large portion of the population cars go beyond utility. They have a sort of car-lust that’s been breed and branded into their psyches since birth.
Falsely, we are told we ‘need’ to have cars.
Okay – so why this tangent?
I believe there is an inherent cognitive dissonance involved when it comes to what the US general populace wants to believe about why we’ve gone to war (twice) in Iraq.
We want to believe the cause is good-will. If we open our eyes to the truth – that the involvement is about OIL – then we are all very clearly operating our lives from a morally bankrupt position. Car culture is pervasive and very difficult to escape.
We drive cars therefore we want lots of oil. We don’t want to feel responsible for killing people over the desire – so we say we are there to save them (and/or ourselves from terrorists).
The US went in unilaterally, without UN backing, because of the quest to control the supply of oil.
This is the same reason we were in Iraq in the early 1990s.
We need to wake up now. When we demand oil in mass quantities – we are part of the problem, part of the cultural impetus that both drives and support Bushie et al-style war crimes.
Really – the solution is to just give up the idea that we should be building our entire cities and landscapes around dangerous metal boxes that will eventually become obsolete anyway.
Plus many, many Americans now suffer from weight issues. Simply walking more would cure many of the currently over-weight. Many of us have given walking up and now think it’s rather natural to cruise about with a giant piece of metal to support the girth on the way to the mailbox, for instance, or to the fast food joint. We have turned into a country of bulbous metal-bots, but for the safe havens like Santa Fe, Boulder, or Portland for instance (places which could be studied for their outstanding bike and foot paths).
Third, during this decade, the fed has kept interest rates artificially low. This drove the housing bubble. This was the koolaid administered. It falsely grew the economy so that the masses wouldn’t be bothered so much to see the economies of the government tanking.
I am not sure why the fed’s actions dovetail so nicely in this regard (look up the dupping of the Greenspan). Maybe due to an overzealous amount of correction coming out of the Internet bubble at first, followed by Greenspan buying into Bushie mind control).
I am seriously appalled when I now see so-called respectable economic commentators say things like ‘wow – we had no idea there was a real estate bubble.’ I find such comments shocking! Unless one has been holed up in a room somewhere for the last seven years.
So while we maintained our state of cognitive-dissonance reducing ignorance and bliss, Bushies et al managed to bankrupt the US government.
Yes, I mean these people stole. This theft took the form of government war contracts, many of which were awarded on a non-competitive basis (I believe 40%).
This derailing of the US government fiscal position undermined the dollar.
(Note: I have just quickly written this and it needs to be fact-checked and references added)
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