More evidence that the left is cracking up comes from fellow central Kentucky blogger Bluegrassroots in a post by Brad Clark. Below is the entire post with my corrections in bold.
Faulty Economics: The Myth of an Independent Dollar
The dollar has had its day in the sun. (Bad start. This is highly debatable and nothing in this essay supports such a statement.) Any lingering warmth from the day will soon fade with nightfall. (Soon? Evidence? No, this is just wishful thinking.) In 1980, the United States was the world's strongest creditor; the dollar setting the standard for international currency exchange, and the value of commodities such as oil, gold, and copper. Even today, the dollar is the standard by which international markets determine value, even though twenty-five years later, the United States is the world's leading debtor. (Factoids don't advance your ambitious premise.)
No other nation in the world owes as much money to foreign banks. No other nation in the world has as much consumer debt (consumer debt curtails consumer spending, which is the bulk of America's Gross Domestic Product). Many politicians and businessmen, the ill-informed bastions of a mythological, quasi-Smithian economic model, (name calling. Nice.) hope that the opening of Chinese and Indian markets will foster the expansion of the dollar's power and the democratizing effects of capitalism, (no, they hope to make money through increased production. It's working.) but as China grows in wealth, the more dependent America becomes to its four banks, (this same reasoning in the 1980's would have us a Japanese colony by now) which are controlled by the Chinese government(ominous and xenophobic, but not very relevant). Over fifty percent of all U.S. Treasury securities are owned by Chinese and Japanese banks.(Again, inflammatory rhetoric and fear-mongering factoids don't make good economic analysis by themselves. You need more.)
In all, the U.S. owes almost three trillion dollars to foreign banks. That is twenty-five percent of America's Gross Domestic Product (GDP). The growth rate of America's debt exceeds the growth rate of the nation's GDP. One does not have to have a degree in economics to see that the equation does not equal economic stability for America's future.(Maybe not, but perhaps a little historical perspective would help. See World War Two.)
The dollar is inflated. The Federal Reserve has recently raised interest rates seven times trying to curtail the inflation of the dollar. The Euro is quickly becoming a stable and expansive form of currency for a strong European market(Europhoric talking points, not a realistic appraisal of the European currency. Currency trading strength in the face of dollar trading weakness is not evidence of true stability in the euro. Another highly debatable proposition). U.S. foreign policy, if it continues to engage in costly conflicts with no clear and easily accessible economic benefits, will eventually bankrupt the American homeland (This is no more substantial than a good Dean Scream). The American government will not be able to avoid going further and further into debt. Eventually, domestic programs will have to be cut (i.e. education, healthcare, social welfare). Not to mention that American foreign debt will inevitably rise. Debt to foreign banks is a threat to national security; especially when the banks underwriting the American economy are owned by the Chinese government. (Chinese banks underwriting the American economy? Reading the rest of this vapid essay assures me that you aren't kidding, but this is utterly ridiculous. Production "underwrites" the American economy. Chinese banks may underwrite a part of the U.S. government, but Econ 101 should teach the difference between the government and the economy.)
As confidence in the faultering U.S. economy diminishes, foreign capital will leave in search of more stable markets. Look at Mexico in 1994 (hello NAFTA, hello Zapatistas), Russia in 1998 (transition to capitalism, hello organized crime), or Argentina in 2001 (attractive South American economy, hello civil unrest). (Totally bogus examples.) The attractiveness of a new market open to foreign investment inflates a nation's currency beyond its true value, and the slightest signs of distress see foreign investment fleeing for safer markets (or, more often than not, ones that have yet to show signs of distress). How much more dangerous is the fall of a nation's economy when it has been the cornerstone of a world economy for three quarters of a century?(The prior two sentences add nothing of value to the discussion. The question would be scary, but there is nothing here --or anywhere-- that suggests the "fall" of the American economy.)
If the American bubble pops(made up scenarios and their explosive demise make great science fiction but poor economic discussion) , the structure of international finance will have to be reevaluated. Can America take a backseat role in the world? It has been well over a century since America really needed welfare from other states. My advice: make sure your kids speak a foreign language. (Foreign language instruction is a great idea, but none of the other ideas here hold any water.)
Posted by Brad Clark at 02:19 PM in Politics Permalink Comments (1) TrackBack (0)
