Hi chomolunga,
Thanks for the excellent point. You've pointed out some of the more bombastic assertions I was making. I'm impressed and delighted that someone is actually thinking on this thread. :)
As far as the CAD vis a vis foreign aid is concerned, I believe that one can make the plausible case that the deficit serves as indication of the subsidization, so to speak, of foreign manufacturers. While the inverse flow, investment dollars coming into our Treasury and corporate financial markets, serves as a prop for our own finance side. Thus, as long as the world trusts the American financial system, we have net inflows. And in the present moment, we may be at a tipping point when the foreign investor may be lining up at the exits, in view of the current situation in the equity and high yield markets.
Are you suggesting China, which runs a large current account surplus with the U.S. is providing us with aid?
Indirectly, as China uses its trade surplus to purchase Caterpillar tractors and computer chips, etc. it is indeed providing for the welfare of Americans.
Here's sort of a big picture view of this:
Look, foreign aid is and always has been a misnomer. What actually transpires, as was the case with the Marshall plan and happens to a much lesser extent today is that the U.S. government takes taxpayer dollars and credits those funds to foreign nations, who then use those funds (which they never hold) to purchase agricultural commodities, machinery, infrastucture such as dams, etc. What is really going on is that the wealth of American taxpayer is re-directed into the pockets of the likes of Cargill, AMD, CAT, Bechtel, Fluor-Daniel and the like. The foreign beneficiaries of this do get some goods and structures out of all this, but by and large, foreign aid most greatly benefits large American corporations. Of course, the same is true of all aid vendors, Japan and Europe play the game exactly the same way.
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My comments on CAD, etc, were meant to be provocative, and I am delighted by your response. You have more than a little clue as to what is going on. I'll be sure to send you posts that are more respectful of reality in the future. Since the general tone on this thread is for the conservatives to be somewhat unanchored to reality, I was just testing to see how wackazoid the right really is. You renew my hope that there is some clear thinking going on. :)
[Note: My point on the Eurodollar market was that it reflects capital flows, not that it is a currency exchange per se.]
Best, Ray |
