Many Americans will find that they can no longer live here, but the dollar will be so weak, we won't be able to move and live out our lives away from the war-mongering, fear-mongering, deceptive U.S. government and their sociopathic pals on Wall street.
What nobody in the corporate media is mentioning amid all the blather about the $700-billion Paulson bailout proposal is the impact it will have on the U.S. dollar.
We are told that this huge gift to the financial sector -- the assumption, at top dollar, of all the bad debt they've piled up -- will be at taxpayer expense, but that's only the half of it. (Really only the quarter of it because since the U.S. government is technically bankrupt already, spending more than it takes in each year, all that money will be borrowed, and will be added to the national debt, meaning that just as the real cost of the $500-billion Iraq War is closer to $2 trillion, the real cost of the $700 billion bailout will be more such as $1.5-2.5 trillion.)
But besides the direct bill handed to taxpayers for this gigantic con, there is the fact that adding that much to the national debt is also going to drive the dollar down precipitously against foreign currencies. We're already seeing that happen, even while they're just talking about the bailout. The dollar is falling against all major currencies -- the euro, the yen, the renminbi and the British pound. And it will continue to fall as the details of the bailout come out.
This will add to already powerful pressures in countries such as Saudi Arabia and China, which hold huge quantities of U.S. dollars and U.S. dollar-denominated debt, to shift out of dollars and into other currencies -- particularly the euro and the yen. Last week, an article in China's People's Daily, which like Pravda in the old Soviet Union, is the official voice of the leadership in China, called for just such a move. Russia is also calling for an end to the dollar as the underpinning of the global economy.
For some years now, many economists have been predicting an end to the dollar as the world's reserve currency, but this latest plan by the U.S. Treasury will push such a shift forward from "some day" to "now."
As long as the dollar has been the reserve currency -- the currency in which key commodities such as gold or oil were priced, and the currency that exporting nations stocked in their treasuries as a store of value -- it was protected against collapse. But once it loses that status, there will be nothing to prop it up any longer, and it will quickly slide to a value that it deserves.
We got an inkling of what is going to happen today, as crude oil prices leapt in the short time it took me to research and write this essay (less than an hour!) by 25%, the biggest jump in the history of the oil market. This timely vindication of my point was purely a move caused by loss of confidence in the dollar. There was no oil supply disruption. In fact, demand for oil has been sinking as the economic crisis grows. Oil producers and traders simply realized that the dollar is going poof, so they
radically jacked up the cost of oil in dollars.
If you want to see what that proper value is, look to the currencies of the debtor nations -- countries such as Mexico or perhaps Mozambique. A nation that makes almost nothing, and that imports most of its needs, cannot have a strong currency.
This might not matter much if we had a functioning domestic economy, where people could find the goods and services they needed without turning to sources from abroad. A big country such as the U.S. could simply turn inward and function on by its own domestic economic standards.
I remember back when the former Soviet Union was in a state of economic and political free fall in the early and mid 1990s, the currencies of the constituent countries, such as Russia, Ukraine and Belarus, had collapsed to virtual worthlessness on the international market. A Byelorussian friend, an engineering professor from Minsk, living and working near me in China at the time, explained that although when he traveled the world, he felt such as a pauper, things weren't so bad back home in Belarus, where he and his family would go in the summer. "My apartment only costs a few dollars a month to rent," he explained, "and our food is bought on the local market using rubles, so it is very affordable." The same was true for other needs, such as clothing and books for school, he explained. The only problem was buying gas for his Russian Volga. "Gas," he explained, "is priced as an international commodity, so it takes me one month's wages in Belarus to buy the gas to drive once to and from our country dacha."
You can start to see the problem. Since agriculture has been killed off in most of the U.S., in favor of giant agribusiness enterprises situated in the Western part of the country and some parts of the Midwest, most people elsewhere will not have local produce available, and the cost of transporting food from California to places such as New York or Pennsylvania will be prohibitive once the dollar collapses, since oil is priced internationally. Meanwhile, goods such as TV sets, computers, phones, cars (or at least the key components of cars), clothing, etc., are no longer even made in the U.S., and will thus be completely unaffordable. As for the service jobs that are supposed to have replaced our old manufacturing sector, no one will be interested in buying what they're offering, because they'll be scrimping just to buy the key staples they need to survive, so of course joblessness will soar.
Eventually, of course, entrepreneurial minded people will begin establishing local farms again where they once flourished generations ago, and small factories will be built to provide key essentials, but all this will take time, and will have to cater to a market of people operating at a much lower standard of living.
The banking sector, meanwhile, which is the proximate cause of this monumental disaster, won't mind any of this, for it will continue operating on the international stage, shifting its focus to lending money (no longer dollars, though), to growing economies in Asia, Latin America, and Eastern Europe. And this is what, in truth, the "rescue" of Wall Street is all about.
It's not about saving Main Street, as Paulson claims. Main Street, under the bailout, is toast. It's about helping the banks and investment banks and insurance companies that brought on this crisis to ride it out in style, their astronomical losses bankrolled or absorbed by the American public, so that they can shift their operations overseas and continue with their rape and pillage of the global economy.
The U.S. will be left behind, a smoking ruin, with Americans, such as Weimar Germans before them, going shopping with wheelbarrows full of worthless green paper to exchange for a few days' groceries.
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The Nazis, Fascists and Communists were political parties before they became enemies of liberty and mass murderers.