American influence and motives.

[miko2d]

Some considerations on american role in the world. And some trends for the future.

 No doubt, USA wielded enormous influence over the developed democratic world and world in general for after WWI and especially since the end of WWII. That influence is waning rapidly.

 1. US was the world's protector from Soviets. That was real and counted for a lot. That is over now. Can't pressure anyone by threatening to pull US troops out.

 2. US was the worlds's largest economy. Such economic dominance was supported by our other influence, of course - lucrative strategic contracts by foreigners were steered towards US companies - but it was a huge contributor to our influence all by itself. We could threaten to stop selling some crucial stuff to someone or close our market and he would quickly fall in line. That is pretty much over now too. Many countries make things as well as we do and buy them as well.

 3. Technological dominance. We could make stuff no one else could. We could threated to stop export of technology or high-tech stuff and ruin someone's economy totally. That is over now. We buy our chips in Taiwan, software in India and scientific brains all over the world.

 There are probably a few more of those kinds of influence including CIA blackmailing foreign government officials with disclosire of illicit affairs and kinky sex practices - which would not work anymore either, with drastic change in public morals.

 Anyway, if USA disappeared, developed democratic western world would would not be affected nearly as severely as it would have been two-three decades ago. Western world is safe, prosperous, socialist but with enough free-market practces to survive untill the declining population causes quiet natural extinction. So far, so good.

 So why would we, americans, not sigh with satisfaction of a job and went back towards our mind-our-own-business, we-are-not-the-world-cop political isolationist/trade partner attitude the Founding Fathers wanted?
 It's not like we were profiting from all our influence and loss of it would cause catastrophic influence to our society. Or would it?

 Let's see. Few would question that it was our influence that caused adoption of (gold-backed) dollar instead of pound as a world currency right after WWII - followed by further raise of US and decline of Great Britain.
 US became a world banker. by 1970 so many ignorant idiots among americans (95%?) came to believe that the dollar was real world money rather than dull pieces of paper. Even when in 1970 US president unilaterallly broke Bretton Woods accord and stopped backing dollar with gold - officially turning it into worthless paper - they still believed so. Most american believe that in 1970s oil-producing countries raised oil prices four times where in reality it was that dollar dropped four times against gold. Price of oil in real money - gold - did not change. It took some persuasion of the arab countries to start acceptng dollar as money, the way europeans had to do.

 What are the advantages of being the world money-maker? Planty. We are running $500 billion trade deficit - buying nice cheap stuff and not producing and selling stuff in return. That raises our level of living considerably - and is not reflected in GNP, since we do not produce. Check any country with the same GNP per person - and americans live better!
 How can we afford that stuff if we are not working for it? We pay with paper money. Some of that money is being loaned back to us in exchange for equally worthless paper of US govenment notes. Most of it get's stored in the foreign central banks as "currency reserve" - as if it were gold or something of real value. Come on - dollars are only good in america and if there was anything worth buying here, we would not have a trade deficit, right? Our trade in products looks like third-world country - raw materials, agriculture and some aircraft that europeans and russians can do not much worth. We import unqualified labor and export high-level jobs, due to our social and union policies.

 If that looks like allegations of some leftists that US is extracting tribute from the world like the late Roman empire - it's only because there is a superficial resemblace. Romans received taxes in the form of goods and presious metals while we pay for it with... paper.

 If some countries did decide to stop accepting dollar as real money and started selling it for other currencies or buying whatever else remains here, the following woud happen: The dollar would drop enormously. We would not be able to buy cheap things and our level of living would drop suddenly. Price of oil would seem to increase many times - in dollars - while it would not really change. The cost of stuff and land and everything else here in US would at the same time raise because of inflow of foreign dollars - just like they drove the stock bubble. The result would be enormous inflation and hardship for americans well beyong just missing $500 billion a year inflow of free stuff.
 How would our fractured and spoiled society behave when the president says "no more free stuff!"? Would we agree to go back to basics and compete with chinese on quality and cost of labor on free-market principles? Sure - those who survive.

 So we would really not want to stop being the world's money issuer but did not have influence to support it. Here comes Euro...

 What will happen when foreign countries replace dollar reserves with Euro or whatever chinese use - yuan? When arabs start accepting euro instead of dollars? Especially when their monarchies selling oild for dollars fall? It would be nice if we could find other sources of influence.

 The only real kind of asset we have that no one else does is military. If only we could find a way to use it...
 How is it possible to influence the western countries without direct occupation? Pretty much everything can be gotten from all over the place or counties we have no chance of subduing - russia, china. Except oil. If we contrlled Middle East, we could surely make them continue accepting dollars rather than euros. And keep europeans continue piling dollars in their banks.

 Now, I do not really believe that over the last 30-50 years US supported all kinds of dictators and religious fundamenatalists and terrorists, er... freedom-fighters and monarchies just so it had an excuse to come in and clean up all that scum, but it sure came in handy. Especially since they've commited the first strike at 9/11.
 Neither do I believe that US intentionally backpedaled on nuclear energy and efficient gasoline use and energy conservation to keep the world dependent on oil.

 After all, if US governments had that much foresight and could get their act together so far in advance, they could have dealt with the actual causes [of decline in american economic competitivness] - Keynesian economic policies.

 I am surprised americans are so insenced about german and french opposition to US invasion into Iraq. Why wouldn't they be? It looks like Iraq invasion is an opening of a war between US and Europe. England still uses dollar rather than Euro and backed the stronger side, but France and Germany are Europe - last time I checked...

 Now, let's start a polite discussion. I would dearly love to be proven wrong here.

 P.S. I think I support the Iraqi invasion now. Better them than us. If it proves a bit more than a quick excursion and we have to keep our tropps there for decades - so much the better.

 miko

[Hortlund]

I'd like to start with this question:

You wrote
"After all, if US governments had that much foresight and could get their act together so far in advance, they could have dealt with the actual causes - Keynesian economic policies."

First, are you of the opinion that Keynes economical model (I am now talking about the governments interaction with the market in times of recession and growth) works?

To my knowledge, every nation that has tried its hands on the Keynesian economic model has failed miserably (Sweden being one very good example of a nation where the government tried the model in an extended period of time).

And second, is it desireable?

I realize this is a political question, but the impression I get from your article is that you feel the Keynesian model is something good.

[miko2d]

Hortlund, I claimed that the Keynesian economic policies as the cause of deterioration of american economy and society.

 Does it sound like I support them?

 Of course they failed miserably everywhere. Except US of course, due to US unique ability among all countries to expand the money supply (print money) indefinitely - untill now, that is, that the racket may be coming to it's end...

 If the Iraqi adventure works, we could print on US dollar "Pacbed by full might of the US military". Let them anybody try to decline it then...  

 miko

[GRUNHERZ]

Bretton Woods became impossible after the 1960s miko. The USA could no longer mainatain gold price at $35 and the other countries for varsious reasons couldnt or did not want to for domestic political reasons keep the peg to the US dollar.  It wasnt some hairbrained act by Nixon.

[miko2d]

The USA could no longer mainatain gold price at $35 and and continue with the same Keynesian economic policies - that would be a true statement.

 Gold price was going up for a reason - and the free market would have adjusted accordingly. Some people would have been forced to revise their expectations and actually work for a competitive salary. There would have been some natural economioc readjustment. A president woudl have been blamed, of course...

 miko

[Hangtime]

I would dearly love to be proven wrong here.

You saved the best lie for last.

 

Anyway, if USA disappeared, developed democratic western world would would not be affected nearly as severely as it would have been two-three decades ago.

Damn.. all that smoke and mirror toejam again miko... to slip this one in? Phullleeeze.. if we dissapered, so would the worlds biggest gawdamned market.. and the worlds biggest by 10 fold supplier of aid, food and military 'knock that toejam off' police.

Miko.. yer whole presupposition dissertation is based on pie without filling.

If it tastes like bread, why call it pie?

... I have developed, over the years, some sense of the difference between real horseshit that you can step in and Ideal Platonic Horseshit that exists, evidently, only in the contemplation of those who worship such abstractions; and I continue to notice that Natural Law bears an uncanny resemblance to ideal Platonic Horseshit. Robert Anton Wilson, "Natural Law"

See.. libertarian horseshit by any other name still comes up tasting like libertarian horseshit.

[Hortlund]

Alright, slow day at work. Time to dive into this one. I think I'll follow your disposition and thus start with your three points.

1) Can't pressure anyone by threatening to pull US troops out.
I disagree. Taiwan, South Korea, Kuweit are the most obvious examples of this. Japan, Saudi Arabia are also valid examples. Then you have all the new NATO members, like Poland, Rumania, Baltic states etc. These are all nations that either depend completely on US protection for their own safety, or nations who would be forced to a completely different domestic and international policy if the US pulled out.  

2. US was the worlds's largest economy.
Well, to be perfectly honest I think the US still is. The only possible competitor would be the EU, but the EU is not as homogenous as the US. The US fed has an influence over world economy that cannot really be overstated. The EU is trying to move in the same direction with the Euro and the EN national bank. However there are a couple of problems with that attempt.
One is that not all European nations are part of the monetary union, two is that the EU is still a collection of independent nation states, as such the various member states will always have their own attitude towards the Euro and the monetary union. For example, there are numerous examples of how Euro member states are ignoring the EU rules with regards to fiscal balance, taxes etc. Simply put, the EU-bank is not able to control the monetary union the same way the fed controls US monetary policy.

3. Technological dominance.
I think you are confusing technological dominance with production placement. While I agree that the US is in no way dominating the technological world, the US position at the forefront of science should not be overlooked. Sure you buy your chips in Taiwan and software in India…so does everyone else. But that doesnt mean that Taiwan or India are becoming technological "superpowers" it just means they have cheap labor. This is nothing other than an extension of the old imperialism-mentality. But this time we are using their poverty instead of using their natural resources. Not that there is anything wrong with that...

Anyway, if USA disappeared, developed democratic western world would not be affected nearly as severely as it would have been two-three decades ago. Western world is safe, prosperous, socialist but with enough free-market practces to survive untill the declining population causes quiet natural extinction. So far, so good.

Here is a statement that is very misleading. True, it would have been worse if the US had pulled back in the 70:s, because then the Soviets would have occupied all of us. BUT that doesnt mean that a US pullback today would be disastrous. Because it would. I am not sure what kind of pullback you are talking about, so I'm assuming you mean military. The immediate short term consequences would be: economic havoc, increased defense spending, change in domestic and foreign policy.

[Naso]

An interesting reading, miko.

But Hortlund's objections too.

Keep the discussion up (and civil) such discussion are becoming a rarety here

Hangtime, I dont think it's all empty that post, reread it before to let the bullets fly.

[miko2d]

Hangtime: You saved the best lie for last.

 You are being ridiculous. I honestly explained my views without any propmting in voluminous posts, fully expecting that they may not be popular with some - namely republicans and democrats, greens, communists, constructivists and fundamentalists. Why would I lie now?

 It just shows your incredible narow-mindedness and arrogance if you believe that people could not honestly oppose your point of view and must be secretly sharing it and lying for some nefarious purposes...

 Why would I want a country where I live to go down the drain?

 Yes, we are the worlds biggest market - paying every year with $500 billion of paper money that cannot be used to buy anything.

 As for USA dropping off the face of the Earth - or going completely isolationist - sure it would be noticed, but the impact would be much less that 20, 30 or 50 years ago. That was pretty clear from my post. "Nearly as severely" does not mean "not at all" by any stretch of imagination.

 Unless you come up with some arguments, what's the point of you just claiming it's not true or even an outright lie and calling it names? It may well be not true, so help us see it. Or do you just want me to post a line in my signature "All aforementioned is considered a vile lie by Hangtime" to save you the trouble responding? What color do you prefer? And what did I ever say to get your panties into such bunch?



Hortlund: 1) Can't pressure anyone by threatening to pull US troops out.
I disagree. Taiwan, South Korea, Kuweit are the most obvious examples of this.

 I was mostly speaking of our domination of the developed western world, but even though I failed to specity it here, it is still valid. South Korea does not behave like it still wants our 37,000 troops there and as for Kuwait, quite a lot of third-world dictators would want us to keep our troops there against their own subjects (which can always be called "terrorists"). They do not appear to fear Iraq, from what they are saying. We were supposed to protect Japan against big bad russian. Are you saying they are scared of NK more? Have you seen their demonstrations with "Yankees go home?"

 As for the rest, I am not saying we are already weaker than anybody else, just that I am worried about the trend towards our diminished significance. We are still the biggest market but with development of China, Russia and Asia, we are getting less important.

 By technological dominance I ment "Know How", not major production things. We were irreplaceable in many repects - now only in a few and fewer every year.

US pullback today would be disastrous. Because it would

 As I've just said, it would be bad but not "neary as severe" and the trend is not in our favor.

 Again, I want to point out that I do not care if the world's well-being is not dependent on US dominance. If it means anything, it means the job well done by US on international arena.
 My concern is that our current order of prosperity is based on that dominance - specifically on dollar being the world's reserve currency (masking the weakness of our economy) - and may crumble with it.

 But I would not try to restore/enforce that dominance but rather fix the structural problems of our society.

 miko

[Maverick]

Miko,

Gold has virtually no value other than in a very limited industrial sense. In other words it has no value other than what people place on it. The same for ANY money. Both are synthetic values of a synthetic economy so the claim the money is worthless is smoke and mirrors. If it is worthless I suppose you pay your debts with gold or jewels (another synthetic valued piece of pretty mineral).

If the money is of no value to you, why do you stick around in an economy that is based on it? Can't you find another location that has the same economic values as you do? The door out IS open you know.

The world economy is tightly linked. There is no place, anymore on this little dirtball in space, for a true issolationist. No industrialized nation on the glode is totally self sufficient. That means they HAVE to trade to maintain or improve their economy. The basis for that trade is money. That very synthetic valuation of currency. Barter has lost it's alure as there was no way to place a consistant value on it and maintain a free floating economy where values can be fluid. Any item in surplus in a part of the globe has less value than in an area where it is scarce. Having a currency that is accepted allows trade to function accross the barriers of surplus and need.

If the United States suddenly disappeared, the world economy would have suffered a dramatic if not fatal loss. The market loss would be bad enough without the loss of production power.

As to the "influence loss" you mentioned., It's still the US that the majority of the world turns to to help them out with their problems, especially with money. Some of us are starting to think that it is expected of us to supply the help without even so much as a thank you. Perhaps it's time to stop.

[miko2d]

Maverick: Miko,
Gold has virtually no value other than in a very limited industrial sense.

 Unlike paper money, government cannot produce unlimited amounts of gold or any other commodity.

so the claim the money is worthless is smoke and mirrors.

 I ment it in a purely practical sense that if the world wanted to redeem the trillions of dollars it holds as reserves and obligations, they would have nothing to buy.

 The value of dollar as many depands on convention and people out there seem less and less agrreable with US. What if they drop convention? What if they already doing so? Why did they even started this Euro thingy if they were happy with dollar as interational reserve currency?
 Of course we may prefer to overlook that like we overlooked the first attempt to blow up the WTC. Why worry, right?

 If it is worthless I suppose you pay your debts with gold or jewels (another synthetic valued piece of pretty mineral).

 I pay my debts with whatever currency is accepted. But I am concerned that it may stop being accepted. Have you seen the price of gold lately? How about the value of dollar Some people are surely shareing my views and voting with their money.

If the money is of no value to you, why do you stick around in an economy that is based on it?

 My share of Phizer stock will always cost exactly as much as a share of Phizer stock. My house in Brooklyn will always be worth a house in Brooklyn - even if we are carting dollars in wheelbarrows like germans did in 1920s. Though I suspect my box of ammunition will be worth its weight in any precious metal. I would rather we do not come to that...

Can't you find another location that has the same economic values as you do? The door out IS open you know.

 And I appreciate that. I never said US was not better than any other place - just that it may be still better and that it may be heading to ruin in the future. Isn't it patriotic to have concern for one's country even if it proves a false alarm?

The world economy is tightly linked. There is no place, anymore on this little dirtball in space, for a true issolationist. No industrialized nation on the glode is totally self sufficient.

 But they surely are less US-dependant that before, And they are intentionally trying to get even less dependant. A lot of stuff that Europe would not buy from Russia and China for political reasons they can buy now. How many european satellites did russians launched before 1990?

The basis for that trade is money. That very synthetic valuation of currency. Barter has lost it's alure...

 Unless the confidence in money is lost. Who said that the money must be dollar? It was pound once. It can be Euro in 15 years.

If the United States suddenly disappeared, the world economy would have suffered a dramatic if not fatal loss. The market loss would be bad enough without the loss of production power.

 True - but the fraction of US in teh world's econoly, especially high-tech stuff is shrinking, not growing.

As to the "influence loss" you mentioned., It's still the US that the majority of the world turns to to help them out with their problems, especially with money. Some of us are starting to think that it is expected of us to supply the help without even so much as a thank you. Perhaps it's time to stop.

 Probably. Our own house may need some attention. Europe has all grown up to handle it's problems.

 miko

[Hangtime]

..paying every year with $500 billion of paper money that cannot be used to buy anything.

Ok. Send me all yer paper money. Please.

[GRUNHERZ]

Gold isnt money miko, the gold standard is gone let it go. Why on earth would you want to artifically limit a countrys total money supply by insisting it be backed, fully or partially,  by gold - thats stupid and outdated thinking. Gold is just a metal, its rare shiny and soft but it has nothing to do with the money supply any more. Even the IMF has been deemphasizing "real" gold in its reserves. Its just a metal, not real money.

[Naso]

Originally posted by GRUNHERZ
Gold isnt money miko, the gold standard is gone let it go. Why on earth would you want to artifically limit a countrys total money supply by insisting it be backed, fully or partially,  by gold - thats stupid and outdated thinking. Gold is just a metal, its rare shiny and soft but it has nothing to do with the money supply any more. Even the IMF has been deemphasizing "real" gold in its reserves. Its just a metal, not real money.

No Grun, Money IS gold.

Or at least WAS.

When the first states dropped the use of Gold made coins, and started issuing lesser intrinsec value coin and/or paper, this currency was representing gold, in fact a lot of money in the world keep the name of the original weight unit: pound, lira (Venetian for lb), and so on...

Then someone thought "well, system is working, why i have to back up with gold my currency?"

It's extremely unrealistic, or better improbable, but the system can stop working, or have big shock.... and then paper is still paper, but gold or other precious materials will be gold and other precious materials (or oil, why not?).

Going back to barter, the gold or others rarities will keep their exchange value, paper not.

It's apocaliptic, improbable, but all the nations dont keep gold reserves for fun, a reason there must be

Side note:
Italy's "reparations" to the Allies after war were payed in Gold from Italy's reserve, not in currency.

[lazs2]

in California... we use the real estate standard to back our paper.   $400,000 buys you a 2 bedroom one bath 50 year old flattop.
lazs