Dropping dollar is dragging the US down with it
For the most part, I try to stick with topics that in some way, shape, or form affect your health. But sometimes well, sometimes I can’t help but digress-and today is one of those days.
At the risk of being one of those boring old men who loves to tell tales of the good old days, I’ll tell you this: The dollar just doesn’t buy what it used to. In fact, at the dollar’s current rate of decline, it’s probable that someone in their 20s today will be able to look back in 10 years and say with regret, “The dollar just doesn’t buy what it used to.” You don’t hear about it much in the news, but the decline of the U.S. dollar is a dangerous crisis with far-reaching ramifications – all of them bad.
I know what you’re thinking: Here comes the anti-Bush rant, right?
Wrong.
The massive blow that U.S. currency has suffered (and will continue to suffer) is NOT the result of the war in Iraq, the war in Afghanistan, or the perceived international hatred of the Bush administration. The Democrats and the anti-Bush left are happy to have you think that this is the case. But it’s actually the free-trade policies that were enacted in the 90s – on Bill Clinton’s watch – that are posing a larger threat to America’s future well being.
Since the passage of the North American Free Trade Agreement (NAFTA) in 1994, and the creation of the World Trade Organization (WTO) in 1995, America has run up $5 trillion in deficits. That’s right: trillion.
The United States government is spending like the proverbial drunken sailor, and it’s our children and grandchildren that are going to have to settle the tab. In the meantime, the rest of us will have to deal with the hideous fallout of the ever-tightening death-spiral of the U.S. dollar. How badly is the U.S. living beyond its means? We are currently borrowing $2 billion A DAY from foreign nations to both maintain our standard of living and America’s various overseas commitments (including Iraq, Mr. President). And near the top of the list of the nations from which we’re borrowing the most? China.
U.S. Downfall: Made in China
To someone of my age, I can tell you that this is a knife in the gut. If you’d told me in my youth that within my lifetime, the mighty United States would be going to China with our upturned hats in our hands, looking for a loan well, I’d have just laughed at you or gotten ready for a fight. At the time, China was a backward agrarian nation, just getting back on its feet after years of devastating civil war. The mantra we always heard growing up was, “Clean your plate – there are children starving in China.”
And now, it’s America who’s turned beggar. It defies imagining. The fact that a sizable chunk of U.S. debt is owed to China is by far the surest and most frightening indication that the 2000s are indeed destined to become “The Chinese Century.” The dollar is dying, and that’s a sign of a nation in decline. There’s no such thing as a superpower with a sinking currency.
The ripples of the death of the dollar and the continuing trade deficit will spread out through American culture. International travel will soon become a privilege known only by the extremely wealthy. In fact, this may already be the case. A single British Pound is now worth over $2 for the first time since the dark, malaise-filled days of the Carter administration, which makes travel to the U.K. a dauntingly pricey proposition. The Euro is now at $1.45, compared with just 83 cents when Bush entered office just eight years ago. In fact, the dollar has dropped in value more during the Bush administration than during any time in U.S. history. But as I explained before, he may be at the reigns, but the seeds of this disaster were sown during the Clinton years.
One wonders if this spiral will help us wake up to the folly of our many foreign aid programs. The way that it’s working out now is that the U.S. is borrowing money from their trade rival China in order to send that money to corrupt leaders in places like Africa. The tyrants in Africa then pocket the money themselves, and then vote for the Chinese at the U.N. If it weren’t such a sorry state of affairs, it might actually be considered funny.
But unless things change radically (and they won’t, regardless of who moves into the White House in January of 2009), it’s not likely that the trade deficit will shrink or the health of the U.S. dollar will improve.
In an election year, this is information that you should know – especially when one of the players in the creation of NAFTA and WTO is likely to be on the ballot.
Oh, and next time you go to a Chinese restaurant and they give you the bill, tell them to just put it on the U.S. tab. Our country may be headed down the tubes, but maybe you can get a free plate of lo mein out of the deal.
