2
1
1
The world has been badly burned by our financiers, and they are not too keen to invest more money here. We've exported our depression to the rest of the world, now we expect them to rescue our economy. The day will come when they cannot or will not purchase enough U.S. Treasuries to finance our deficits.
Interest rates on our national debt are low only because bondholders are confident in our ability to make payments. The US dollar maintains its value on world markets because foreign nations believe we can afford our appetite for imported goods. As our economy implodes and our deficits skyrocket, the world is losing faith in the dollar.
Our currency lost one third of its value between 2002 and mid-2008. It is only recovering now because of its status as a safe haven during the crisis. The one thing holding up the dollar right now is fear of the consequences should the world's reserve currency collapse.
The danger is that as the dollar declines in value, it becomes less profitable to hold, and the incentive to sell dollars increases. If enough central banks and foreign investors began unloading US assets, other investors and financial institutions will see the dollar rapidly losing value. They will have to sell their US securities quickly, to protect themselves from further losses on their dollar denominated holdings.
This will cause another financial panic, and the hyperinflation of the US dollar.
A run on the dollar is inevitable, and will create a vicious cycle causing our currency to depreciate even more. As our dollar loses value, foreign goods purchased with dollars become more expensive. Since we are now dependent on imported goods, (see the trade deficit figures above), our shrinking dollar means higher prices for those goods.
The United States has endured boom and bust cycles in the past. But the Robber Barons who gave us the Great Depression also built railroads, steel mills, and car factories. The entrepreneurs who created the dotcom bubble also gave us the internet and world wide web.
These oligarchs have created nothing but debt.
During the Great Depression the United States was the world's largest creditor. The Federal budget was balanced, and we had trade surpluses with the rest of the world. We were the world's number one producer of cars, we made our own clothes, and our oil came from Texas.
Debt, and our dependence on imported oil and manufactured goods will make the coming collapse much worse.
The Chinese are not going to fill our Wal-Marts with electronics, the nations of the Middle East are not going to pump our oil, and the Mexicans won't pick our crops in exchange for worthless paper.
When the dollar collapses, everything will be gone.
America survived the Great Depression, and went on to victory in World War II. After the war the United states emerged as the pre-eminent nation on this earth. We will survive the Third Depression as well, but our days as an economic superpower are over.
...
