Make no mistake, the dollar has been pushed from its perch at 30,000 ft and is freefalling to earth at breakneck speed. The ensuing carnage will be catastrophic for both the American people and the world. For all practical purposes the dollar is the â€œglobal currencyâ€. It represents the crowning success of US efforts to manage the world economy and to dictate the rules of international trade. Regrettably, the Bush administration has elected to abandon all economic precedents by flailing the dollar with record-breaking deficits and unsustainable tax cuts; its part of ambitious and, yes, moronic scheme to sacrifice solvency to the god of ideology. While deficits soar, social programs are savaged; or so the theory goes. The strategy originated during the Reagan administration and was dubbed â€œStarve the beastâ€; a plan designed to role back 100 years of progressive legislation by generating more debt.
At present, the Bush plan has added another $2 trillion to the national debt. The problem is compounded by the soaring trade deficit with China (a situation that enriches Wal-Mart and other major Bush campaign contributors) and the Bush Tax Cuts, which were enacted as a reward to the nationâ€™s wealthiest CEOâ€™s and bankers. (Americaâ€™s trade deficit with China is easily solved by bringing charges against Chinaâ€™s illegal practice of â€œpeggingâ€ the Juan to the dollar to WTO. This, however, would punish the many wealthy US industrialists, now operating out of China, who benefit from the current system)
Congress has been equally complicit in undercutting the dollar. Theyâ€™ve enthusiastically endorsed the Presidentâ€™s foolhardy tax cuts and have financed those cuts by raising the national debt limit three times in four years. (The last time was three weeks ago when they secretively added a whopping $800 billion to the national debt) The Republican congress has again illustrated that it is little more than a fully-owned franchise of corporate America. Alan Greenspan has also made major contributions in weakening the dollar. By managing interest rates in a way that accommodates policy, he has facilitated the tax cuts and unleashed a new round of imperial wars. Much of our current dilemma is his making. Greenspan could have stopped the dollars slide months ago by shoring up interest rates. Instead, he hastened the fall by keeping rates artificially low. Heâ€™s shown that he is a fullyâ€“invested partner in a lunatic strategy to pummel social programs by escalating debt. Among Greenspanâ€™s circle of friends, debt has been the most effective tool for achieving their objectives. If we look at how the world is managed, the US has been more successful in meeting its goals through economic coercion than by force of arms or covert operations. Its emissaries in the IMF and World Bank are little more than the â€œGlobo-copsâ€ of the new world order; restructuring debt in the third world and stealing their resources in the process. Itâ€™s an international Ponzi-scheme that keeps the leg-iron of debt firmly affixed to the worldâ€™s poorest countries. The apologists for this economic tyranny breezily refer to it as â€œfree tradeâ€. (even while resources are being extracted at gunpoint)
Thereâ€™s nothing accidental about the falling value of the dollar. From the beginning weâ€™ve seen Bush and Co run up enormous deficits to reward party loyalists and to put the country in the control of the Banking-Business establishment. Never the less, the plan does have its shortcomings. Consider the current world oil predicament. As author Dave Lindorff points out in a recent Counterpunch article â€œApocalypse Soonâ€: â€œThe first thing that would likely happen is that the big oil exporting nations–Russia, Saudi Arabia, Nigeria, Venezuela and Iran–would, along with the rest of the producing countries, switch their pricing away from dollars to Euros, or perhaps a basket of currencies. That would have the effect of undercutting all support for the dollar, while causing energy prices in the U.S. to go through not just the roof but also the stratosphere. The impact on the U.S. economy would be immediate and drastic–akin to your SUV running out of gas on the freeway.â€
Lindorffâ€™s calculations are dead-on, thereâ€™s simply no incentive for Saudi Arabia or Venezuela (for example) to trade in dollars when (if they had converted months ago to Euros) they would be getting nearly 45% more on their investment. Second, we should note that nearly 50% of all American currency is held outside the country. When investors begin to sell those dollars, because of the fiscal recklessness of the current White House, we will begin to see a precipitous decline in American living standards. As far as Team Bush is concerned, this is a good thing. Their unstated goal is to bring Americans in line with the realities of the global economy. Newt Gingrich summarized the Republican vision best when he stated, â€œThe price of labor is set in South China, because that is the largest center of work force on the planet. So, if you want to live seven times as well as somebody in Canton, youâ€™re going to have to be seven times more productive.â€
You read that right; â€œseven times more productiveâ€ just to maintain your present standard of living. The plummeting dollar is a crucial part of Gingrichâ€™s plan. It moves us one step closer to the â€œnew world orderâ€; a regime that targets unions, wages and benefits through currency devaluation. It pits American labor against the most underpaid workers on the planet, expecting them to compete while industrial capacity is steadily shipped overseas.
Beyond the schemes and stratagems, the debilitated dollar signals the predictable hemorrhaging that takes place when all the levers of state power are controlled by carpetbaggers and criminals whose sole intention is to bleed the country dry and then move on to their next host. In essence, the Bush cabal has a firm grip on the nationâ€™s credit card and wonâ€™t let go until the last â€œborrowedâ€ dime is extracted.