>>>It's called comparative advantage, the US is allowing world economic partners to supply US demand for goods, as
it should!<<<
That's fine, except that the U. S. isn't supplying anything in return except dollars. Well, we are supplying political and military leadership, and that is certainly worth something. But I am afraid that the situation that prevailed mostly WITHIN the United States in the 1920s is repeating itself on an international scale. That is, the 1920s prosperity depended on cheap agricultural products; farmers were already in a depression years before 1932. Also, there were huge inequalities of pay and income. The prosperity and glamor of life in the U.S. cities in the 1920s depended on hardship elswehere. The prosperity in the United States today depends on exploitation elsewhere.
I just stood up and took off my shirt. Sure enough: "Made in Sri Lanka." Someone is hunched over a sewing machine there stitching this very well-made shirt together for pitiful wages so that my wife can buy it on sale at The Gap and give it to me for my birthday.
When the purchasing power of the dollar declines, not only will such shirts be more expensive, but simultanously demand will drop and the Sri Lankan company and its employees will be hurt.
No doubt our government economists are trying to keep all these things in mind, but the repeated efforts by the government, especially the federal reserve, to anticipate any kind of economic contraction have encouraged such a huge accumulation of debt in the last five years that any faltering of the economy will lead to a pretty violent contraction in spending.
I was trying to understand and explain how such a contraction in demand could occur simultaneously with a rise in prices--indeed, be reinforced by price inflation.
I certainly do believe in globalizing of the economies, so that other countries can specialize in what they do best.
The trouble with understanding economics is that not only does any one value depend on numerous other values, but by by the time you have figured something out, everything has changed!
I do think that in various ways the United States has been enjoying the products and commodities of other countries at bargain rates and that many Americans' idea of economic hardship may have to be revised.
I have read a lot of books about economics, and the only ones that seemed to get things perfectly clear were the introductory textbooks. And the reason they got things clear was that they were oversimplified and misleading.
But it does seem clear to me that present financial arrangements in the United States cannot continue much longer. At some point creditors expect to get paid back. And at some point, workers in other countries will not be able, even if they want to, to supply goods at prices low enough to persuade American to go on buying with their depreciating dollars. |
