Watching the Dollar Die.

[chimper]

http://www.informationclearinghouse.info/article19530.htm

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand.

[magellan]

1. Along with our country

I'd say "good read" but it isn't -- the entire subject is heartbreaking. But thanks for sharing it and welcome to DU, chimper.

[Zyg]

2. Good article, wrong conclusion

Conclusion made in the article - "The US is already over stretched both militarily and economically. An attack on Iran is likely to be the straw that breaks the camel’s back."

Assuming that America is facing another 1920's dustbowl depresssion, then history tells us that the only way for America to escape is to invest heavily in a right-wing country with no Unions.

Between 1933 and 1941, US investment in Nazi Germany increased by about 48%. This was mostly because, post-Weimar, Germany needed funds to rebuild and only the US could provide the investment (Europe was still recovering from WW1).

Then America chose to join WW2. Which was no bad thing economically because unemployment decreased dramatically - everyone was either enlisted or worked in the munitions factories or on the war effort. This means that employment taxes increase, as do corporate taxes, so the Government can spend more money (on the war and on internal infrastructure) and so the economy recovers.

So - IF America faces another 1920's depression, then a LONG war that costs lots of money (hence requires lots of US investment and creates lots of US jobs) is a good thing - the economy will, eventually, recover.

However, this relies on:
1) Oil and Dollars remaining linked. The OPEC agreement that binds the US$ to the price of oil may end if the dollar continues to collapse, and we may see a switch to the Euro (btw, if that happens, the dollar is screwed - imagine how many dollars are tied up in oil at the moment. Then imagine all those greenbacks flooding back to the Central Reserve as everyone sells dollars to buy Euros. The dollar price will collapse, putting you back into a depression MUCH worse than the 1920s)

2) The war remaining on-going. Halting the push into Iran will slow the war-economy, causing further depressions.

What a wonderful world!

[Angela Shelley]

4. Depression is better than war.

[Ezana]

5. Economic melt down is probably permanent

I believe that there are many small but un-insignifican contributers to the inevitability of the fall of the US economy. I also believe that the downward drive of the US economy is not something that can be reversed through change of regium or change of economic policies. Why ? Generally speaking, because America´s monopoly on technology and Capital is no more existent. Now, other countries are increasingly taking high-tech businesses away from the old powers. Now, the pie is shared among many countries and the "problem" with the US (its economy)is that it is getting it difficult to lower itself (its economy) to the level of the new comers. But, the problem is that it can do nothing unless it forces other countries to do business (sale raw material and buy goods)only with US; and by the way, the so called American Hedgemony is all about this, forcing others to give advantage to US, an advantage that the US can no more achieve merely through free trade.

Other factors that contribute to America´s economic woos are:

- the world is becoming unsafe both to US citizen and US investiment- thanks to America´s ......

- whenever the US imposes a unilateral embargo on certain countries who do not dance to its music, it is also putting embargo on its own companies from operating in these countries, therby giving de facto previlage to companies from other countries.

- the World is waking up and the US does not any more have monopoly on information (media); and thus it can no more change world perception through mere propaganda like in the 1980s and before. Just look at what happened in South America recently. It was clear to see that the propaganda from US media showed US interest in the escalation of the conflict between Colombia and Equador. But those countries were able to avoid it by themselves; some of them have even accused the US of adding fule to the situation. Has this situation been among African countries, the situation would defenitely have gone out of control, a mere CNN/BBC propaganda fuel would have made a serious damage.. But, things will definitely change in Africa too.

etc....

[Windex]

3. Assistant Secretary of the Treasury during President Reagans first term

He also called for Bush impeachment in 2004.

He knows his stuff, we are basically screwed. Welcome to 3rd world status.

[eridani]

6. Gold and silver are just as much fiat money as anything else we might use

Like electronic blips on hard drives or paper, you can't eat gold or silver, drink them, wear them, build shelter with them, or burn them to keep warm or get from point A to point B. (OK, you could wear them, but if that's all you had on you'd be pretty chilly right about now.) Why not denominate our currency in joules?

[ThomWV]

7. Not to climb all over your butt, but you're wrong.

Ours is not 'fiat money' at all, nothing like it. "Fiat Money" is properly US currency which is not exchangeable for coins. That is what the phrase means. You could go into any store that would give it to you and ask for chance for a dollar and they would give you coins. Case closed.

[eridani]

8. Not seeing the distinction. Give them 100 pennies and you get a dollar

Since it works in both directions, either both are fiat money or neither are.

[ThomWV]

9. Wrong again

Go look it up. "Fiat Currency" is "US Paper currency which is not redeamable for coin" Not the other way around, despite your current inability to 'see' it. Any dictionary would set you straight if you don't beleive me. If you want to communicate with people you have to use a common language, you can't just make up your own definitions.

[eridani]

10. I'm arguing about the usefulness of the distinction.

"Fiat" is Latin for "Let it be so." The implication is that the value of paper currency is purely arbitrary. Well, so is the value assigned to coinage. And both of them are in much shorter supply than the electronic blips on computer hard drives that people use for >90% of their transactions.