Not a Peep about the Trade Deficit

This morning I submitted the following “letter to the editor” to USAToday:

In an extraordinary display yesterday, with the nation on the brink of financial collapse, we witnessed our President, our top economic leaders and the leader of one of our biggest corporations appealing for market calm, assuring us that our investments are safe and rolling out the latest turn-around in the automotive sector’s death spiral. Simultaneously, economists pondered how the American Debt Machine might be restarted. Yet, not a single one of them so much as uttered a peep about the root cause of this mess – our $750 billion per year trade deficit which has drained $9 trillion of the life blood from our economy over the last three decades – real money, not the “funny money” printed by the Federal Reserve to replace it. Americans should be appalled at this lack of leadership or, giving free rein to my more cynical side, this organized conspiracy to hide the truth about what their trade policies have done to destroy our country.

Pete Murphy

Author, Five Short Blasts

I must admit that there are time when I suspect that globalization is a vast conspiracy by global governmental and corporate leaders to shake down the American people and redistribute their wealth to the rest of the world – perhaps a grand plan to sustain the relative peace as the world grows more desperately over-crowded.  I know, I know, it’s too unbelievable that such a conspiracy could be kept quiet without someone intentionally or inadvertently blowing the whistle.  But lately, especially after the events of yesterday, it seems even more incredible that the collective stupidity of governmental and corporate leaders is so great that none are capable of recognizing what our trade policies have done or dare to call them into question.

8 Responses to Not a Peep about the Trade Deficit

  1. FJ says:

    Pete – thanks for commenting on my blog earlier.

    It is amazing that there’s no outrage from the masses over the fiat money currently being used to bail out the housing sector – Massachusetts is about to get in on that by bailing out their own turnpike authority with an $800million refinancing. Back to the gold standard, I say! Maybe not that extreme, but this is part of the problem with an independent federal reserve – it can play itself off the government where blame gets passed around like a hot potato in bad times. In good times, Clinton got some of the credit as we witnessed a huge economic expansion and the deficit went away. In bad times, Bush is getting a lot of the blame as defense budgets have continued to rise while issues at home seem to come second – lending fiascos, corporate corruption, domestic economics. Who’s to blame, really? Well, sure, the Bush administration in some respect, but also short-term thinking economists who seem to not be acting independently at all, but acting in the interests of corporate masters & politicians – people who only care about the next election. While banks get bailouts, our dollar weakens, and as the dollar becomes cheaper & cheaper, even American institutions like Bud & Bud Light become the property of European entities.

    Re: globalization – visit – a bit extreme in some cases for most, but if you want to hear some great anti-globalization rants, you can’t go wrong 🙂

  2. Pete,
    This is a nice short, concise, and to the point article. It is this type of reporting that in my opinion is the most effective at garnering the publics attention.

    As you state, these are real dollars earned by Americans and sent overseas never to be seen again. Not to mention the more than $600 Billion exported for foreign oil.

    And to think, the whole thing was operated on credit. I say was, as it appears that is no longer possible. Police to calm a bank run? Well…yes.

  3. Pete Murphy says:

    Thanks for stopping by, FJ! I think you’re right, that it’s economists who are most to blame. They need to get over Malthus and start considering the ramifications of population growth, instead of shrugging it off and dismissing those concerned about the issue as “Malthusians.” They don’t want to talk about it because they can’t fashion a reasonable explanation for how growth can continue forever.

    Regarding Clinton and the economic boom, he just happened to be in office when the phony “” boom took off, along with an explosion of PCs and cell phones. It masked the underlying problems in the economy for a while. Bush has enjoyed no such obfuscation and now looks like an idiot as our problems have been laid bare.

    Mike, I hear ya. And a bank run would pale in comparison to what would happen if foreign governments started a “run” by dumping treasuries! The police in your bank run scenario would be replaced by military forces in this scenario!

  4. FJ says:

    Pete, note the new link to my blog, FYI:

    I had been trying to think of a decent name for a while and kind of settled on this new one. Azzurri was meant to convey my love of the Italian soccer team (nicknamed Azzurri) but I wanted something a bit better as an actual, honest-to-goodness author actually stopped by to read some of my drivel 🙂

    – FJ

  5. FJ says:

    By the way, didn’t a major Indy bank close up recently? Do you think this is going to get worse than the S&L crisis of the early 90s?

  6. Pete Murphy says:

    Thanks for the link, FJ!

    Yeah, IndyMac Bank in California had to be taken over by the FDIC on Friday when rumors of financial problems, real or not, caused depositers to begin withdrawing funds at a rate of $100 million per day. How a California bank adopted the name “IndyMac” I have no idea.

    Could this get worse than the S&L crisis? I’m no banking expert, but I’ll say this: the amount of debt, much of it bad debt, has exploded since then. Since 1990, our national debt, in constant dollars, has tripled. And since that time, Americans’ ability to repay debt and the federal government’s resources for back-stopping such debt has eroded badly. My concern is that we’ll get locked into a downward spiral, where mortgage defaults cause bank failures (already happened), causing credit to tighten, slowing the economy, causing companies lay off more workers, which forces more people into mortgage default, restarting the whole cycle. Clearly, the government is very worried about the same scenario and about the potential for panic to take hold.

  7. FJ says:

    …and yet, still, tuition rates continue to rise. I went to BU, I can’t believe how high tuition rates are now…they seem to be operating in a bubble despite the fact that even student lending has seen a tightening.

  8. Pete Murphy says:

    It’s purely a function of population growth. Tuitions at America’s top universities are rising so much faster than inflation because, with a growing population and no growth in enrollment at these institutions, they can cater to an ever-smaller percentage of the people who make up the upper crust of our society. They charge more tuition because they can. Also, the federal government floods the nation with foreign students to keep competition keen for these limited openings at our top universities.

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