Well, the biggest bubble of them all was... the foreign policy
that not only encouraged, but made countries use fiat US dollars
as a reserve currency. That was done in the 90-s and 2000-s
through Credit rating agency country downgrades, tough
IMF sanctions, etc. We built a consumption society on
that with little or no real production as we induced currency
crises in these countries, then bought cheap
products from abroad with freshly printed cash. Made in
USA products completely disappeared from our stores.
They hoarded our dollars to protect themselves from further speculator
attacks, but then of course we have a lot more dollars - we
can print 'em! With every recession a new bubble was blown,
and new "industries" emerged that did nothing productive as
we consumed more and more foreign goods with printed dollars.
Oh, and we did it again last year, as we downgraded our
creditors, inducing currency crises in these countries.
That probably helped to cure the imbalances
Especially the enormous printed cash and guarantees
injected into financial sphere, while allowing the
real economy to burn (GM, Chrysler).
That mega-bubble has yet to correct, and that process is just
starting. Talks, some walking (disposing of agency debt) |
