The dollar is plunging because America has been living beyond her means, borrowing $2 billion a day from foreign nations to maintain her standard of living and to sustain the American Imperium.
The prime suspect in the death of the dollar is the massive trade deficits America has run up, some $5 trillion in total since the passage of NAFTA and the creation of the World Trade Organization in 1994.
In 2006, that U.S. trade deficit hit $764 billion. The current account deficit, which includes the trade deficit, plus the net outflow of interest, dividends, capital gains and foreign aid, hit $857 billion, 6.5 percent of GDP. As some of us have been writing for years, such deficits are unsustainable and must lead to a decline of the dollar.
A sinking dollar means a poorer nation, and a sinking currency has historically been the mark of a sinking country. And a superpower with a sinking currency is a contradiction in terms.
Bush's economic plan is sort of like the stay at home housewife who tells her husband not to worry about the clothes she is buying because she did not spend any money on them, she just charged them!
Bush acts like he has been able to wage two wars without raising taxes because of some amazing economic strategy. But the truth is that we just have not seen the bills come in yet because we have been financing them with money from China, and a few other countries.
When this bottom falls out, it is going to fall out hard. And it may very well signal the end of our nation as we now know it.
all a good point...but the media doesn't even follow well enough.....
ReplyDeletefor some of us we won' t have far to fall..
(ahem- those down at the bottem of the grunt pile....like ahhhh me ;-)
As much as I'd like to blame Bush (and he certainly deserves a lion's share of the blame) much of this IS Americans living beyond their means. Like enigma, I won't have far to fall.
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