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Is a Weak Dollar a Strong Sign? Not So Fast!
William Anderson
Campaign
For Liberty
Wednesday, Oct 21st, 2009
Readers of George Orwell’s 1984 might recall
Big Brother’s claims that "war is peace" or
"freedom is slavery." Orwell was writing a novel,
but some of the commentary these days makes me think that elite
economists have taken residence in Oceania’s "Ministry
of Truth."
Today, the champion—the uncontested champion of Orwell’s
"truth"—is Paul Krugman, the 2008 Nobel laureate,
Princeton professor, and New York Times columnist. For those
who read his twice-weekly column or glance at his blogs and
commentary elsewhere, it is like reading the latest pronouncements
from the "Ministry of Truth," and, like in Oceania,
it seems that the masses believe the nonsense.
Had I not read Krugman’s column, I never would have known
that Jimmy Carter, who began the modern deregulation movement,
was a right-wing Republican, or that the solution to almost
all our economic ills is for the government to raise taxes,
borrow, and print more money. However, his latest missive has
managed even to outdo the Ministry of Truth itself. Big Brother
would have been ecstatic.
There is not enough byte space in the universe to refute Krugman’s
latest pronouncement completely, but a couple of the most glaring
holes can be discussed here.
As most readers know, the U.S. Dollar has been falling fast
against other currencies and members of OPEC are balking at
continuing to price crude oil exclusively in dollars. Instead,
they have suggested a "basket" of currencies, as they
realize that our government’s policies are likely to turn
the USD into something like the Zimbabwean Dollar.
Enter Professor Krugman, who writes:
The truth is that the falling dollar is good news. For one
thing, it’s mainly the result of rising confidence: the
dollar rose at the height of the financial crisis as panicked
investors sought safe haven in America, and it’s falling
again now that the fear is subsiding. And a lower dollar is
good for U.S. exporters, helping us make the transition away
from huge trade deficits to a more sustainable international
position.
Not so fast. The USD is falling because the rest of the world
understands that the USA no longer is a "safe haven"
and investors looking elsewhere. When super investors like Jim
Rogers tell us to get out of this country altogether, people
need to listen. Rogers does not have a Nobel to his credit,
but he is no crackpot and he fully understands (unlike some
American Ph.D.s) that the U.S. Government does not create wealth
with the printing press.
While it is true that a falling dollar does make U.S. exports
cheaper, the question is what can we export other than commodities.
The government’s environmental policies alone continue
to raise the cost of manufacturing and we are being forced by
the political classes to divert productive resources into failed
enterprises like General Motors and the zombie financial institutions
on Wall Street.
Alas, Krugman does not stop there. No, he claims that what
our economy "desperately" needs is—get this—more
"easy credit." That is right; the very thing that
gave us massive malinvestments and brought the U.S. economy
to near-ruin is what we "desperately" need. As I have
written elsewhere, this is like claiming that the best way to
deal with alcohol addiction is to imbibe even more.
For all the talk that the government’s policies of bailouts,
printing money, and borrowing at record rates have "prevented"
a second Great Depression, the truth is that all the government
has done is to give the illusion of recovery while setting us
up for an even worse Day of Reckoning. By keeping the zombie
entities afloat, the government continues to force even more
malinvestments at a time when liquidation is the order of the
day.
The Keynesian propositions of printing money and borrowing
might be popular to the political and intellectual "elites"
of this country, but they are utterly destructive in the real
world. Unfortunately, we are being fed Orwellian "truths"
at a time when what we need to hear is the unadulterated truth.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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