Letters to the Editor
bostonMA
Published Letters: 36 Editor's Choice: 22
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Deadbeat Nation
[Read the article: Who's the superpower now?]
[Read more letters about this article: Here]At a current price of about $115 per barrel, that's $1.5 billion per day, or $548 billion per year. This represents the single largest contribution to America's balance-of-payments deficit, and is a leading cause for the dollar's ongoing drop in value.
True. However, the United States has always been a significant user of energy. This isn't new, even with an illegal war underway and another on the way in the next few months. This has been true for decades.
What has changed is that we're adding massive government deficit spending and unprecedented consumer borrowing and consumption to one side of the equation when we no longer produce goods that the world wants to buy on the other side.
What does China get out of U.S. consumers purchasing millions of new flat screen televisions and stainless steel appliances to furnish overpriced homes? These same Americans are most often employed to shuffle money, property, or goods around in the service sector, which doesn't produce a thing that they can buy. The scale of this imbalance is not sustainable even if we were completely energy independent tomorrow.
We send hundreds of billions of U.S. dollars overseas each year on this spending. Nations that export oil to the U.S. or actually manufacture goods (primarily China and Japan) have nothing to exchange dollars for. For years these productive nations have just lent these U.S. dollars back to us so that we can spend more and they can produce more. Now, instead of lending they are beginning to purchase larger equity stakes in US companies. Why not? The debt securities they hold aren't paying high enough returns to keep pace with our destruction of the purchasing power of the U.S. dollar, nor is there much hope that we are beginning to profitably produce enough to repay these obligations.
This cycle ensures that not only will we leave our children in great debt for their lifetimes to pay for comforts we are enjoying today, but also leave them destined to work for firms that are owned by foreign interests, including foreign governments. There will be great outrage over this trend among our politicians. The reality is that this can only be reversed when we begin to control government overspending on both military escapades and entitlement promises, and we abandon artificially low interest rate policies and a monetary system that creates so many incentives for the consumer to borrow today instead of work and save for tomorrow.