Posted on 11/13/2004 11:40:59 AM PST by RedOhio
November 22, 2004 issue Copyright © 2004 The American Conservative
Goodbye, Dollar—and Empire
by Pat Buchanan
Whoever wins Nov. 2, two predictions seem solid: the mighty U.S. dollar has begun an inexorable decline, and the American empire is coming to an end. For whether George W. Bush wins or loses, America is headed for a political gridlock that will rule out any bipartisan assault on our “twin deficits.”
No matter who wins, the House Republicans of Tom DeLay will retain the numbers to veto any tax increase, while Democrats will retain the strength to prevent any serious cuts in entitlements.
Thus no successful assault will be made in the next four years on a fiscal deficit of $415 billion (4 percent of GDP) before the first wave of 77 million Baby Boomers reaches early retirement in 2008. After that, goodbye balanced budgets forever.
Our trade deficit is now $600 billion a year, with a deficit in goods near $700 billion. To finance our binge buying overseas, we borrow $2 billion a day from abroad. Foreigners are using the dollars to snap up our stocks, bonds, and real estate, gaining a permanent lien on the future rents, interest, and dividends of U.S. enterprises. We have mortgaged our children’s future to enjoy the good times today.
The Baby Boomers, celebrated by liberals in the 1960s as the “finest young generation we have ever produced,” will likely go down in U.S. history as the most self-indulgent and selfish.
To sustain our appetite for foreign goods, the world is being flooded with dollars. But there are signs that world is growing weary of financing our consumption. The price of oil, denominated in dollars, has soared to $55 a barrel. The price of gold has risen from $260 an ounce to $420. The dollar has lost a third of its value against the euro under Bush. The world is betting against us.
The only question seems to be: will the dollar’s decline be gradual or will there be a run on the dollar, as with the Mexican peso? If the latter, the Fed would have to raise U.S. interest rates to bring investors back into the market to buy the Treasury bonds to finance our budget deficit. Then, bye-bye recovery.
A sinking dollar also means rising prices for imports, which are now near a two-century high at 15 percent of our entire economy.
The deindustrialization of America could be reversed if we were willing to return to Hamiltonian economics, rewrite our tax and trade laws, and dump the WTO into the Atlantic. But the transnational corporations that finance both parties will not allow it, for their executives have grown royally rich transferring factories out of the United States into the low-wage countries of Asia and the Third World.
The dirty little secret of our era is that the interests of Middle America are now in conflict with the interests of America’s corporate elites. They are anxious to get out of the United States and shed their American work force.
In sustaining the empire, we are suffering from a separate deficit—of imperial troops. With an army of only 480,000, only a fraction of them combat troops, we cannot both defeat the rising Iraqi insurgency and credibly threaten Iran and North Korea with a preventive war to achieve regime change. And Iran and North Korea know it.
Any attack on Iran’s nuclear facilities would invite Iranian support for Shia insurgents in Iraq and acts of terror against American installations across the Middle East. U.S. casualties would rise, oil prices would hit $80 a barrel, and the war of civilizations could be upon us. Any attack on North Korea’s nuclear facilities could ignite a peninsular war and risk atomic retaliation on U.S. troops.
Where would we get the troops to fight such a war? Should a President Bush or Kerry ask for a draft to fight another land war in Asia, Congress would turn him down or be turned out of office.
Walter Lippmann described a credible foreign policy as one that “consists in bringing into balance, with a comfortable surplus of power in reserve, the nation’s commitments and the nation’s power.” By that standard, U.S. foreign policy is bankrupt. Under the Bush Doctrine, we are committed to fight until we pacify and democratize Iraq, and to be prepared to wage preventive wars on Iran and North Korea to deny them nuclear weapons.
Yet we do not have the troops to guarantee these goals. Moreover, we lack the military, if challenged, to honor all the guarantees we have given to the NATO nations, Japan, South Korea, Taiwan, the Philippines, Australia, and Thailand.
The Dow is falling, the dollar is sinking, our dependency on imported oil is growing, our country goes billions deeper into debt every day, and U.S. forces are stretched to the limit containing a medium-sized insurgency in a medium-sized Arab country.
An American empire? Who are we kidding?
WE ARE DOOMED!
Pat, who are U kidding these days - you dinosaur.
If only we'd elected you president, Pat. All would be well. LOL.
Pat 'The Sky is Fallin' I tell You!' Buchanan.
I have been listening to this tripe for 15 years. Add him to those who point to problems, but never seem to be part of the solution.
"An American empire? Who are we kidding?"
Considering Pat is the only one who talks about empire, I guess his question answers itself.
Gee whiz. Isn't there anything we can do? So, I guess this is the end. Oh well, it was nice knowing everyone. I am off to jump off the roof of my building. Thanks Pat.
PS. Doesn't this all mean that the goods made in America will be cheaper then goods made overseas?
We've heard all this from you before, Pat. Now shaddup.
Pat's there to make the rest of us look good.
Pat has turned into the right-wing's AlGore...
Earth to Pat, we just had a private corporation put a man in space.
Pessimism never accomplished anything other than slowing down the progress of optimists. We still manage to get the job done, though.
I stopped reading right there. Now where did I leave that doggone tinfoil hat?
The value of the dollar is falling, because we have a huge trade deficit and huge federal deficit (7 trillion dollars and growing, Yikes).
This will eventually be corrected by cutting services and raising taxes. At the same time, the dollars will eventually drop far enough that it will be cheap for us to export our products, and this will correct the trade deficit. Just my 2 cents.
"Whoever wins Nov. 2, two predictions seem solid: the mighty U.S. dollar has begun an inexorable decline, and the American empire is coming to an end."
I already take up arms with his first sentence. First, Bush already won - why the speculation? - this is an article to be published on Nov 22, not Oct 22. Second, has the dollar really begun an inexorable decline? Looking at our economy's direction compared to that of the EU, I would wager my bet with the U.S. and the dollar over the EU and the euro. It's all about trends and growth, which we have and they essentially don't. And if you were such a scholar, Pat (frankly you're just being disingenuous and you know it), you would understand that economic policies take years to go into full bloom, about 4-8 years. And look who was in office 4-8 years before now. Surprise, surprise: Bill Clinton. Gee, if that doesn't give us a clue, I don't know what will. Next thing you know, Pat will be telling us that Clinton was a better President than Bush!
Concerning the American "empire" - it never existed - so there's no point in my responding to your comments about "it."
Our trade deficit is frightening, but it has little or nothing to do with President Bush.
The dollar is indeed heading south, and at some point there is going to be some economic pain as we adjust to reality. But if Buchanan was in charge we'd probably be in the middle of another Great Depression. Bush has done well with the lousy cards he was dealt by his predecessors.
As a side note, I agree that we have a problem with the trade deficit and the national debt, but these are problems that can be overcome. I hope the President and Congress work to correct these issues in the coming 4 years.
Dow is falling?
Last time I checked it was up 800 points in two weeks, headed for a new year high, and maybe even a new all time high some time in 2005.. but falling?
I'd have to turn my monitor upside down to see that...
sounds like a clip from the kerry side of the campaign.
enough of this drivel.
Why did this guy Buchanan endorse the man who shares so much of the blame for the coming decline? Pat's "twin deficits" are a little closer to home then he realizes.
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