Dollar Collapse!

It hasn't happened yet, but financial gurus are predicting the dollar will collapse, and "your American lifestyle" with it--unless you follow their prescriptions.

These gurus are describing a real problem: US indebtedness to the rest of the world. But the Fed didn't cause this, and it's not because The Government spends too much money; it's because we all do--abroad.

"Free Trade" agreements have advantaged American corporations. They have been able to export their manufacturing and services to lower wage, lower tax countries with lax or no regulations. They've driven American wages down and unions out, because American workers can only compete by earning less: wages have stagnated since the 1970's, while corporations have earned higher and higher profits. Furthermore, everyone buys imported goods and services, even when a product claims "made in America." Most have a huge amount of imported components, even if assembled here.

So, what can workers do? Until the bust, they adapted by working two plus jobs, depending on other family members working, and when these strategies weren't enough, they borrowed from their homes. Wall Street was awash in cash, encouraging wilder and wilder speculation--before the collapse, and after. That's why so much of the economy migrated to the financial sector; workers were providing it money through debts, and corporations were providing it money through overseas profits going to the 1%, who "earn" too much money to spend; so, they "invest" it.

Free trade means freedom for corporations, not freedom for workers, and it means importing nearly everything. So, how do we pay for the goods and services we no longer produce? We borrow through fiat dollars, which have, greatly depreciated since Nixon closed the "gold window" in 1971. Gold sold for between $1,726 and $1,743 on 11/2/11; but its price was set by the US until 1971 at a guaranteed $35 per ounce. Money supply has increased 13-fold since 1971.

Fiat money is designed to inflate a little bit each year: the Fed's target is about 2%. Moderate inflation stimulates the economy; deflation would accelerate depression.

But the real problem is: we are paying dollars created by the Fed, for goods and services abroad, while not selling enough to earn the Euros/Yen/Yuan, etc. to pay for those dollars. The "Free Trade" agreements, and policies encouraging corporations to export jobs and import goods have created the huge trade debt.

The trade debt causes government budget deficits, especially when the only people enriched by "free trade" (our Roman Senators) don't pay enough taxes, while everyone else is impoverished by it and needs help: "bread and circuses."

The dollar and the economy would regain strength, if Americans stimulated domestic production, creating jobs, got off imported oil and penalized corporations exporting jobs/production. It appears, however, that the "one-percent," like the Senators of the late Roman Empire, don't want to allow such reforms.

Perhaps the OWS movement can force their hand.