The $1.4 Trillion Question (The Atlantic Monthly)

I am not an economist, so you don’t have to listen to what I have to say about the economy. But I am inclined to believe that the US economic woes are all about currency. The dollar is overvalued. It’s propped up by its status as crude oil currency. There are enough dollars in foreign hands to buy the United States and turn it into a parking lot. Why are these people hoarding dollars ? Because dumping them would depress the ‘price’ of the dollar, i.e. it would be shooting themselves in the foot. Look at the dollar versus the Euro ! A 50% increase in 5 years. Is it just higher interest rates in Europe ? Or are people starting to loose faith in the greenback ?

The Feds borrow money from China and the rest of the world. They make cheap loans to banks who make cheap loans to you. You spend the money on things made in China. I guess it’s a Chinese form of subsidizing their economy using the US as middleman.

The rest of the world goes shopping at Wallstreet, bailing out ailing out US banks and mortgage giants. If this foreign investment is based on faith in the strength of the US economy – like so many things in economics that are essentially psychological, it begs the question how strong an economy is that produces money faster than toilet paper and produces less and less while it consumes more and more … like I said, I am not an economist.

Here is the link to an Atlantic Monthly article I read recently that talks about some of these things.

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