America’s Economy Caught in a Trap

Our economy is caught in a vicious cycle – a downward spiral:

  1. The trade deficit is the main cause of the falling value of the dollar.  We’ve been flooding the world with dollars through an enormous, ever-growing deficit that is approaching one trillion dollars per year. 
  2. As the value of the dollar declines, oil prices rise because oil is priced in dollars.
  3. As oil prices rise, so too does the trade deficit, since most of our oil is imported.  This returns us to step 1 to repeat the cycle.

So how do we escape this trap?  It’s not self-correcting.  That is, the rising price of oil won’t reduce the trade deficit sufficiently, because two thirds of the trade deficit is due to a deficit in manufactured goods.  It may slow the cycle, but we’ll continue to flood the world with dollars month after month, steadily driving down the dollar, regardless of what happens with oil.  But rising oil prices do accelerate the spiral. 

The only way to escape this trap is to break it at step 1.  Only a 2-pronged attack on the trade deficit will work:

  1. Attack the deficit in energy by first stabilizing and then reducing the U.S. population and by simultaneously implementing any and all alternative energy forms available to us:  solar, wind, nuclear, fuel cells, etc., etc.  And, long-term, intensify research into fusion power.
  2. Attack the deficit in manuctured goods by implementing the population density-indexed tariff structure called for in Five Short Blasts to restore the profit incentive needed for domestic manufacturers to flourish once again. 

This is the only way to put America back on a path to a healthy, sustainable economy. 

 

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