Paul Craig Roberts: Shrinking the US Dollar from the Inside-Out

[seafan]

Shrinking the US Dollar from the Inside-Out

By Paul Craig Roberts
December 12, 2007

On December 8, Chinese and French news services reported that Iran had stopped billing its oil exports in dollars.

Americans might never hear this news as the independence of the US media was destroyed in the 1990s when Rupert Murdoch persuaded the Clinton administration and the quislings in Congress to allow the US media to be monopolized by a few mega-corporations.

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The assault is symbolic, because the dollar is not the reserve currency due to oil exports being billed in dollars. It's the other way around. Oil exports are billed in dollars, because the dollar is the reserve currency. ..... Indeed, the evidence is that foreigners are not finding dollar-denominated assets sufficiently attractive. The dollar has declined dramatically during the Bush regime regardless of the fact that oil is billed in dollars. Iran is dropping dollars in response to the dollar's loss of value. This is a market response to a depreciating currency, not a punitive action by Iran to sink the dollar. ..... Today oil imports comprise a small part of the US trade deficit. During the decades when Americans were fixated on "the energy deficit," the US became three to four times more dependent on foreign made manufactures. America's trade deficit in manufactured goods, including advanced technology products, dwarfs the US energy deficit.

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There are two reasons for the dollar's demise. One is the practice of American corporations offshoring their production for US consumers. When US corporations move to foreign countries their production of goods and services for American consumers, they convert US Gross Domestic Product (GDP) into imports. US production declines, US jobs and skill pools are destroyed, and the trade deficit increases. Foreign GDP, employment, and exports rise.

US corporations that offshore their production for US markets account for a larger share of the US trade deficit than does the OPEC energy deficit. Half or more of the US trade deficit with China consists of the offshored production of US firms. In 2006, the US trade deficit with China was $233 billion, half of which is $116.5 billion or $10 billion more than the US deficit with OPEC.

The other reason for the dollar's demise is the ignorance and nonchalance of "libertarian free market free trade economists" about offshoring and the trade deficit.
There is a great deal to be said in behalf of free markets and free trade. However, for many economists free trade has become an ideology, and they have ceased to think.
Such economists have become insouciant shills for the offshoring interests that fund their research and institutes. Their interests are tied together with those of the offshoring corporations.

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While free trade economists hold on to their doctrine-turned-ideology, the US dollar and the American economy are dying.

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[seafan]

1. But, ' Americans are being told that they have never had it better.'

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One of the great lies of the offshoring interests is that US manufacturing is in trouble because of poor US education and a shortage of US scientists and engineers. Pundits such as Thomas Friedman have helped to spread this ignorance until it has become a dogma. Recently, General Electric CEO Jeffrey Immelt lent his weight to this falsehood. (See "The US No Longer Drives Global Economic Growth," Manufacturing & Technology News, Nov. 30, 2007.)

The fact of the matter is that the offshoring of US engineering and R&D jobs and the importation of foreign engineers and scientists on work visas have combined with educational subsidies to produce a surplus of American scientists and engineers, many of whom are unable to find jobs when they graduate from university or become casualties of offshoring and H-1b visas.

Corporate interests continue to lobby Congress for more foreign workers, claiming a non-existent shortage of trained Americans, even as the Commission on Professionals in Science and Technology concludes that real salary growth for American scientists and engineers has been flat or declining for the past 10 years. The "long trend of strong US demand for scientific and technical specialists" has come to an end with no signs of revival. (See "Job and Income Growth for Scientists and Engineers Comes to an End," Manufacturing & Technology News, November 30, 2007.)

What economist has ever heard of a labor shortage resulting in flat or declining pay?

There is no more of a shortage of US scientists and engineers than there were weapons of mass destruction in Iraq. The US media has no investigative capability and serves up the lies that serve short-term corporate and political interests. If it were not for the Internet that provides Americans with access to foreign news sources, Americans would live in a world of perfect disinformation.

Offshoring interests and economic dogmas have combined to create a false picture of America's economic position. While the ladders of upward mobility are being dismantled, Americans are being told that they have never had it better.

The next target of the "have-mores" will be the destruction of the information superhighway.

[kickysnana]

2. Destruction of the Internet campaign "in progress" by far right.

For This Addiction, 12 Steps Aren’t Enough
http://nc.startribune.com/blogs/kersten/?p=329

December 11th, 2007 – 7:58 AM
Alcohol and drug addiction have plagued us for centuries. But as 2008 rolls around, the New York Times reports, we are facing a “new and potentially deadly addiction: cyberspace.”