<The standard of living under what we class as "poverty" in most of these United States is often higher than that of the middle class in many other places on the globe.>
That is a true statement. But do you understand the process in which that has come about and how that is related to the POG? Your thoughts concerning Bush as being Pro Gold and for a weaker US Dollar, tells me your clueless.
Let me explain:
The EU understands perfectly that it is now the United States which is in debt to Europe - debt which the U.S. Treasury owes Europe - and debt which the Europeans no longer need as reserves.
The US Political Establishment wants to maintain, indefinitely, the current U.S. ability to perpetuate a credit expansion which ensures an outflow of U.S. Dollars and, an inflow of foreign goods with no higher real economic cost to the U.S. than the creation of the credit Dollars used with which to buy the goods. Naturally, once the foreign sellers of these goods to the U.S. stand with their U.S. Dollars in hand, they exchange them for their own national money. To sell the Dollars, they require a buyer. As long as the Dollar is a reserve currency, the Central Bank will always buy Dollars, even if no one else will. But, in order to buy these U.S. Dollars, all these other Central Banks have to create the sums necessary with which to buy them in their own national currencies. That means that their own national currencies are inflated in quantity to the extent to which they have to buy.
Having bought, these Central Banks stand with a quantity of additional U.S. Dollars. Their problem then is whether to try to sell them (in which case the U.S. Dollar falls in value globally), or whether to use them to buy something else. Since the end of World War II, that something else has always been U.S. Treasury debt paper.
And THAT is the fundamental problem for the U.S. political Establishment.
The U.S. Political Establishment has been able to supply the American nation with foreign goods at no higher economic cost than the placing of additional debts of the U.S. Treasury in the Central Banks of many and varied other nations. The foreign goods were produced, and then sold into the U.S. economy, and all that really happened was that the holdings of U.S. Treasury debt paper outside the United States climbed ever higher.
Because of this, Americans have had a higher real living standard than would otherwise have been the case. The American Public does NOT know this! They truly think and believe that their living standards are all of their own making. Any calm look at the official debts, held externally, of the U.S. Treasury would show that this is NOT the case.
Consider what would have happened had the U.S. been unable to place its debts in foreign Central Banks. It would have had to BUY the amount of foreign goods these external U.S. Treasury debts now stand in for. If individual Americans had been like anyone else, they would have had to PRODUCE real goods and sell them at globally competitive prices in order to earn the money with which to buy foreign goods. In such a case, what would American living standards have been today? To get a glimpse of the answer, just consider that the latest current account deficit of $US 435 Billion is 4.6% of U.S. GDP.
It is the maintenance of this imported addition to U.S. internal living standards that the U.S. political Establishment is fighting for.
How do you think a much higher POG will affect this living standard? |
