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Friday, December 17, 2004

House of Cards

Time magazine has an article about the falling dollar and the possible implications. They mention the downside, although not as starkly as some:
[O]ver the long haul, a banana-republic dollar could lead to inflation, higher interest rates and a recession likely to spill around the planet. In the past, the strong dollar allowed the U.S. government to borrow cheaply and attract investment in the safest currency on the globe. That helped finance the budget deficit, kept interest rates low and also allowed Americans, as individuals and collectively through their government, to spend way beyond their means. Foreigners are big buyers of mortgage securities, which make purchasing that McMansion more affordable. They hold nearly $2 trillion of Treasury securities, keeping government costs low enough to allow the President to consider his new initiatives. But foreigners may be reaching their saturation point when it comes to funding the U.S.'s profligate lifestyle. The nation sucks up 80% of the world's available savings. If the dollar loses its cachet, foreigners will demand higher interest rates, which, if they rise fast or far enough, could topple the economy.
But, like "good" mainstream media, they end on an upnote:
In this delicate balance, if the Japanese hold their dollars, if the Chinese let the yuan rise even a little and suggest they are willing to go further, if Europe does something to jump-start demand at home, and if the U.S. addresses its budget shortfall well, we may just escape this jam without a scratch. That's a lot of ifs. But, thankfully, everyone has something at stake.
Frankly, I find explanations like Alex Wallenwein's, that all of the currency and financial manipulations are just one of the ways that the powerful elite uses the labor of the poor to help transfer the wealth of the world into the hands of the few at the top, much more believable than Time's conclusion. What we call "money" seems to be one enormous lie resting on top of a house of cards wrapped in a mystery inside an enigma. As long as enough people are willing to believe the lie (mostly because of the obscuring wrapping), the system stays afloat. Actually, for much of the world--Argentina, Iraq, most of Africa, and for poor people everywhere, the system has already collapsed.

The key, as always, is for the wealthy elite to co-opt enough of the population to enable them to completely pillage the rest. This is a major theme of Howard Zinn's A People's History of the United States. In the US, it has generally been the poor and middle-class white people who have been recruited to help the wealthy do their pillaging--against the Native Americans, against the blacks, against the immigrants, against the Mexicans and Haitians and Vietnamese and Nicaraguans and Panamanians and Iraqis. Give these NASCAR dads the dream that they can someday become a part of the elite, and suggest to them that those "other" people are their main obstacle to overcome. It has worked for 300 years; it worked on November 2. Meanwhile, the global monetary system is sucking the remaining wealth out of all these people.