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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (16127)	1/12/2002 1:10:32 AM
From: Bilow	Read Replies (2) \| Respond to of 281500

Hi Maurice Winn; Re: "The idea of Uncle Al printing $$ billions and USA voters owning it might not be suitable if the voters go stupid, so I think the rest of the world had better get another currency not subject to the whims of Americans and their politicians." This is sort of at odds with your keeping investments in US stuff. Let me try and explain this from the US point of view. Greenspan's printing presses are running at full tilt in order to prevent the US from being starved of dollars. Where is all that money going? It's getting sucked out of the country by foreigners who like the greenback. This is quite painful for workers in the US. Sure, imports are frighteningly cheap here, but that makes it that much harder for our manufacturing companies to compete with. *We've been forced into service jobs by the popularity of the US dollar.* Our farmers are going bankrupt (or sucking down huge piles of government aid) despite the fact that we have the most productive farms in the world. The natural export of the US is food, but instead we're being forced to export greenbacks instead. If we didn't print the money to replace the stuff that gets sucked out, we'd be in a depression, without enough money in circulation for everyone to keep liquid. And there's no way that we can keep the foreigners from sucking the money out. The best way to do it is to force interest rates lower, and the best way to do that is to buy up bonds. That means printing money, but no matter how much we print, these guys can't seem to get enough. This is a problem that we didn't have back before we were the world's reserve currency printer. England had it before us, and they suffered the same way. There is another side to the story and that is what happens when all the Maurice Winns of the world decide to cash in their US investments. Since their cashing in their investments tends to drop the value of the dollar, they all th end to get scared and do it at the same time. The last time they did this to us was the late 70s, and believe me it was some bad times. We end up with our imports instantaneously zooming up in price, and to try to control inflation the Federal Reserve has to suck up all that money coming back into the country. This is amazingly painful, and it's probably going to happen sometime in the next 5 years. Currencies generally crash sometime fairly soon after the stock markets crater, so we're due for the back side of that infamous "J" curve in our balance of payments deficit fairly soon. Japan got rid of the problems with being the world's reserve currency by simply making it painful for foreigners to own their currency. The effects of this round of trade balance reversals may make us do that too. I can understand why foreigners would buy up our assets when the dollar is cheap, but why are they doing it when the dollar is high? Somehow the concept of "lemming" comes to mind. -- Carl

To: Maurice Winn who wrote (16127)	1/12/2002 1:48:58 AM
From: joseph krinsky	Read Replies (1) \| Respond to of 281500

"The USA isn't suitable as some unconstitutional neighbourhood ruler with aliens being second class citizens. We need some international constitution a bit more reflective of the principles applied to people in the USA." I don't think you understand. Aliens are not second class citizens, they're not even 100th class citizens. They're not citizens at all, they're guests. BTW-We're quite happy with our Constitution, we don't need an international one.