ECONOMICS 101 ( CONT.)
Thanks to our terrible international balance of trade, the world is awash in dollars, trillions of dollars in the hands of individuals, banks, companies and governments. With the precipitous decline in the value of the once almighty dollar, many holders would like nothing better than to get rid of them. They would prefer pounds, euros, and other currencies. Some of their holdings are still used in international trade. Some is spent in purchases of US real estate, corporations and even in US infrastructure. Billions are parked in US government securities. Oil producing countries don’t want the dollars very badly so they sell reluctantly and demand ever more dollars
per barrel of crude.
Too many dollars are chasing too few places to put them. Economics 101 tells us that this is the classic formula for inflation. This situation is now out of the hands of the US government. The debasement of our hard earned dollars and our accumulated nest eggs are in the hands of foreigners, some of which are not our friends.
One doesn’t like to think of where this might end. Perhaps, when the wages of our workers sink to the equivalent of the Chinese worker’s our balance of trade might turn around. Then this country might not seem like the promised land anymore.
That is pretty pessimistic. We are still a great and powerful nation.
Let us hope there is some better future for us.
2 comments:
Yikes! I never took you for an optimist, but this is pretty gloomy granddad. I wish I could disagree, but I must concur: the future does not look bright.
I wonder which straw will break this country's back...
I heartily agree with everything you have said. Of course, Walmart was (is) the catalyst that triggered our huge trace imbalance by bringing us the cheap and inferior) products from China in bulk -- supposedly to save the consumer a dollar here and there, but in truth to be able to derive higher gross margins on their products while selling these products for a little less. Well, all the competitors had to follow suit as to not be left behind. Slwoly but surely, this has eroded our manufacturing capabilities, filled our landfills, and transferred our valuable, expensive technology to China for less then a penny on the dollar. Oh yes, we are so smart, aren't we? We can for now buy a bunch of garbage to fill our homes (and landfills. I guess it is a good thing that we can at least afford the cheap trash that is brought in from China, since most of our workers have been "Walmartized" (Amy, that means that the decent paying jobs these workers once had are now not very decent paying jobs and they definitely cannot live off of them without tremendous government subsidies, cause all competitors must get close to paying the puny Walmart wages to compete with Walmart). So, now the taxpayers subsidize Walmart's ultra-rich executives so they can get richer (and no, this is not exclusively a Walmart issue anymore -- it extends to K-Mart, Target, and even I hate to admit my own Piggly Wiggly). However, the impetus was started by Walmart.
The amount of goods that consumers buy will not vary that drastically whether Walmart exists or not. The variance is in the choice of venues. How many record and music stores have you visited lately? My guess is none, cause Walmart put them out of business. Now lets see, what happens when all venues are dried up and your only choice is Walmart? Oh you argue that the government will never let that happen... Look at the scrutiny that Whole Foods got when buying up a competitor ( all for a less than 3% of market share of groceries). why has Walmart had no scrutiny as they open stores where they have over 50% of market share. The answer is simnple, they have bought off the government.
In conclusion, Walmart started the trade imbalance, and they continue to make it worse. Dollar stores soon followed in Walmart's steps (I spent 2 hours in a Dollar General one day and can venture a guess that 100% of their merchandise is from China). So, I do think Walmart is the evil empire that will evetually bring America to its knees, and it may be too late to stop this trend. On the bright side, every home in America will be filled with cheap, gaudy trinkets from China that they may otherwise not have afforded (ha!)
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