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Wednesday, September 29, 2004

Delusion Rules

Here's another great column from former Moonie Times writer Paul Craig Roberts (I've figured out why he's "former," the Moonie Times (aka Washington Times) part I don't understand).
The US might be a superpower, but it is not a country that controls its own fate. Delusion does.

Much of the US public is deluded about the invasion and occupation of Iraq and its consequences and about the state of the US economy.

Just as Americans are deceived into believing that Iraq was involved in the September 11 terrorist attack on the US and threatened America with weapons of mass destruction, Americans are deceived into believing that they benefit economically from outsourcing, offshore production, and an unprecedented trade deficit.

The deceivers emphasize the lower prices, not the lost incomes and destroyed careers, that result when American workers are replaced by cheaper foreign labor. The deceivers allege that the trade deficit means that we get to consume more of the world's goods than we produce, with the added benefit that foreigners pay for our excess consumption by investing in America.

The truth of the matter is that "foreign investment" in the US today consists of Asian central banks, mainly Japan and China, using surplus earnings from massive trade surpluses to prop up the US dollar by purchasing US government bonds.

By propping up the dollar, Asians keep their goods and services cheap, thus worsening the US trade deficit. Washington goes along because Asian countries use their export surpluses to finance the US budget deficit.
It is inevitable: America's mounting debts will produce a crisis. The dollar's value will plummet, and US living standards will drop. Everything will become more expensive for Americans.

The perilous condition of the dollar is one of the reasons Bush invaded Iraq. What keeps the overvalued dollar up is the fact that it is the currency in which the Middle East bills its oil. Every country has to purchase dollars in order to pay for its oil, and these purchases keep the dollar afloat.

Just prior to the US invasion, sanctions on Iraqi oil had run their course and were about to be removed. Saddam Hussein intended to bill Iraqi oil in Euros, which could have started the abandonment of the dollar by the oil producing countries. Instead of fixing our economic problems, we started a war.
The REST of the story.