The Falling Dollar and Rising Debts
Published 08/22/07 Jim Baird
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E-mail - editor@economyincisis.org
There is no way to dress it up- the greenback is losing its worth. A Congressional Quarterly article noted the dollars recent performance against major currencies during June 2007:
A 30-year low against the Canadian dollar.
A 26-year low against the British pound.
An all-time low against the Euro.
These economic indicators are not favorable, but the declining dollar is a symptom- not the sickness. The root of the problem is the underlying debt, loans and imports America and its people are forced to depend on to maintain our present day standards of living.
The U.S. continues to go deeper and deeper into the red: a rising national debt approaching $9 trillion, the 2006 trade deficit a record high $765 billion.
At the same time Americans are saving less: in 2005 Americans had the lowest reported savings rate since the great depression at negative 1%. During the same year, consumer debt totaled $2.2 trillion.
These debts are supported by nations like China that buy debt in the form of loans and stabilize (prop up) the U.S. economy. As of December 2006, China loaned almost $350 billion in U.S debt, a figure dwarfed only by Japanese debt loans of almost $645 billion that same year.
A sinking currency value, skyrocketing debt, and a dependence on other nations to support America through loans, are a far cry from the profile of a superpower the U.S. presently enjoys.
It is a reality for America that many have not fully come to grips with: the country that was the world’s greatest producer is now the world’s greatest debtor nation. But it does not have to remain this way.
The fight against accumulating debt from all corners of society will not be easy- but it must be undertaken. America must invest to reinvigorate its industrial base and give the nation’s best companies incentives to operate domestically rather than selling out to overseas investors, which jettisons American wealth and opportunity abroad.
Through the creation of better domestic job opportunities and revitalizing industries, America can start to wean itself from its import-driven debt dependence. Let’s hope Congress starts to listen- and companies start migrating into and not away from the land of opportunity.
Jim Baird is the managing editor at EconomyInCrisis.org. He is a journalist and commentator. Mr. Baird studied in the Honors Politics program at the University of Edinburgh and is a graduate of The Ohio State University where he studied political science and journalism.
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Regarding Karl Marx, greed and overreaching as the downfall of Capitalism, history shows that Karl Marx was marginalized in the 19th Century in England and the U.S. because good hearted people who were trained in sunday school to love their fellow men, could not stomach the ugly child labor conditions in early capitalism. In the 1930's the opponents of unrestricted greed gained control of the U.S. government and established rules which enabled the U.S. to outproduce Germany in WW II and to become the most productive country in the world.
Reagan persuaded some fearful people that the U.S. problem was welfare queens and a government that tried to do too much controlling of human behavior. Good hearted people can overstep just like greedy capitalist.
After the excesses of George Bush are corrected, I believe that the U.S. will seek some way to reduce the money-grabbling ability currently avialable to the Wall Street gamblers to manipulate the system to benefit only themselves. And restore some rewards to those who can create goods and services we all enjoy.
Karl Marx was certain that the population as a whole would never obtain enough political power to reign in the excesses of Capitalism. In this he was wrong. He is also wrong when he says that Capitalism will inevitably self-destruct. The Democracy of Andrew Jackson, Abraham Lincoln and Franklin Roosevelt saved capitalism in the past and it will emerge again to save capitalism by restricting the ability of powerful people to cheat the rest of us. This will require some new people to be elected to the Congress.