Have Americans been living above their means these past 37 years (since 1980)? I think so. We have borrowed and borrowed (and borrowed) to maintain our prosperity and our exceptional lifestyle with much of this at the expense of the world’s citizens who provided us the goods. America has 4.4% of the world’s population yet we consume some 23.6% of Global production. How can this happen? Why this favoritism?
What happens is that America has the ‘reserve’ currency for the planet and we can buy goods and services without any penalty/restriction from ALL nations. America can buy on credit (debt) from all 200+ countries on our planet. We can consume much more than we produce (in exchange) as we are essentially the BANKER for the planet. Our dollar ($) is accepted mostly everywhere and this allows us to consume beyond what other countries are capable of doing (given their situation).
Other countries…do not have a reserve currency which is accepted by all nations. This means that these (less favored) countries must live mostly by their own production and via a much lower level of borrowing. Every country borrows to a degree but America can BORROW to excess (as we have a currency which every other nation desires). The SYSTEM favors America!
So is America an exceptional nation (economically) or are we mostly exceptional in taking ADVANTAGE of the System? Are we ‘giving’ an equivalent amount to what we ‘take’ from the planet? This is an important issue in economics. It appears that America does ‘take’ more than they ‘give’ (especially in consumer products and the goods sector of the world economy). Why do we run trade deficits every year to the tune of billions (today some $768 billion)? This has been happening every year since 1976. The cumulative trade deficits have exceeded some $12 trillion.
If America was ‘giving’ to the planet in proportion to what we are ‘taking’ from the planet, then our trade deficit should be closer to zero… Our debt situation should be much less and our manufacturing should be much higher. We should also have a currency which creates ‘discipline’ so that production is in balance with our consumption. Having the ‘reserve’ currency for the planet provides us ENORMOUS advantages and creates HUGE suffering for many others on our planet! This is all due to the financial SYSTEM as it is set up!
When you look at the numbers above, think about the BIG picture (the entire planet of 7.4 billion people). We now live in an interconnected global society where each person should be viewed as an equal (economically). Does our SYSTEM allow for this equality of prosperity? I don’t think so!
The comments above are edited ([ ]) and abridged (…) excerpts from the original article by Donald Swenson
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