America's Superpower Status Coming to an End

Newsmax.com ^ | 3/1/05 | Paul Craig Roberts

[beyond the sea]

The U.S. economy is headed toward crisis, and the political leadership of the country – if it can be called leadership – is preoccupied with nonexistent weapons of mass destruction in the Middle East.

The U.S. economy is failing. The afflictions are serious. They could be fatal even if diagnosed and treated. America is losing the purchasing power of its currency and its ability to create middle-class jobs. Story Continues Below

The dollar's sharp decline and projections of continuing trade and budgetary red ink are undermining the dollar's role as reserve currency. A number of central banks have announced that they will be diversifying their currency holdings and will not be buying dollars at the same rate as in the past. This will put more pressure on the dollar. At some point, the flight will begin. Instead of buying fewer dollars, central banks will sell dollars, hoping to get out before the dollar hits bottom.

Suddenly, the advantage of being the reserve currency becomes a nightmare, as the world's accumulations of dollars are brought to market. An enormous supply and weak demand mean a very low exchange rate for the once almighty U.S. dollar.

Overnight, those cheap goods in Wal-Mart, which are the no-think economist's facile justification for Wal-Mart's decimation of communities, small businesses and employment, shoot up in price.

[Toddsterpatriot]

yea, you guys never talk about manurfacturing/capital goods yall lump farming, mining, paper, printing and lumber (suppling raw materials to the more advanced manurfacturing nations) into one "goods" catagory hoping to mislead everyone.

Please all knowing one, bestow upon us the facts that make your case.

Please show us a graph that shows "Manufactured Goods Production" from the 1940's to the 2000's. Make your point with facts, not feelings.

[1rudeboy]

[Y]ea, you guys never talk about manurfacturing/capital goods yall lump farming, mining, paper, printing and lumber (suppling raw materials to the more advanced manurfacturing nations) into one "goods" catagory hoping to mislead everyone.

Good grief. Maybe because "you guys" never provide squat?

[Toddsterpatriot]

I'm curious, what's "suppling" and "manurfacturing"? I guess that's why they're looking for the wrong "catagory".

[1rudeboy]

Did you notice the comment about "the more advanced manufacturing nations?" I wonder which nations those might be?

[N. Theknow]

And just today the purchasing agent of my largest customer told me they were shutting down their plant in Germany and bringing everything over here.

[1rudeboy]

Darn Chinese keyboards.

[1rudeboy]

[Gasp!] That would be in-sourcing. Are you sure you're on the correct website? LOL

[Toddsterpatriot]

And just today the purchasing agent of my largest customer told me they were shutting down their plant in Germany and bringing everything over here.

Damn. The only thing sneakier than those godless Chinese is those damn Germans.

[jpsb]

Very difficult to do since categories are constantly being redefined in a transparent attempt to make bad news sound like good news. Numbers for the 40's and 50's are now meaningless with manufacturing being redefined to include making hamburgers at MacDonalds. Ya, that did not fly but the attempt was made so I use it to illustrate my point.

To further illustrate my point I recall a clever saying "who are you going to believe me or your lying eyes?" I used to see made in the USA often in stores, jeans, shoes, TVs, cars, just about everything was made in the USA. Now when I go to a store I have to look and look hard to find ANYTHING with a made in the USA label. This indicates to me that we are not making alot of stuff here anymore. Add to that the pleases for help from industry after industry being buried by a flood of cheap imports and I think it i reasonable to conclude that US manufacturing is in trouble. Even hi tech manufacturing since very little of my computer contains a made in the USA label.

Now you can post your charts, but I will believe my lying eyes.

[Toddsterpatriot]

Did you notice the comment about "the more advanced manufacturing nations?" I wonder which nations those might be?

I saw and ignored it. I'm sure he'll be "suppling" the names of those nations to us.

[Southack]

"The only way we can compete is to lower our standard of living toward theirs while raising their standard of living toward ours in a process of entropy." - William Terrell

No. The way that we compete is by replacing human labor with free robot labor.

Even cheap Chinese and Indian labor can't compete with the free labor of an American Coca-Cola softdrink vending machine/robot.

...And putting those American machines in offices around the world doesn't *lower* our standard of living, it raises it. Now it's a little more convenient to grab a drink. Life just got a little bit better.

Same thing holds true for introducing robot painters onto automobile assembly lines; ditto again for robot welders.

The more that we automate, the higher that our standard of living goes. Those robots, for instance, give us better quality paint jobs on our cars than the old hand-sprayed jobs...at lower costs. Those robot welds are consistently better than the old human welds, too...giving us cars that hold up longer.

How do the Chinese and Indians compete against free American robot labor?

While you're worried about the U.S. somehow "lowering" our standard of living, not only have our real living standards increased (e.g. life span, healthcare, % invested in stock market, % who own their own homes, etc.), but the reality is that it is our competition that relies upon "cheap labor" that is getting slapped around by our robots.

How do such nations compete against fully automated factories?! How do they compete against softdrink vending machines and newspaper vending machines?!

Cheap labor isn't the threat. Cheap labor is being threatened.

By the U.S.

[Toddsterpatriot]

Don't bother me with the facts. Perfect!!

[1rudeboy]

Numbers for the 40's and 50's are now meaningless with manufacturing being redefined to include making hamburgers at MacDonalds.

gurgle, gurgle [bong hit]

[1rudeboy]

If one does not see it within three feet of one's nose, it does not exist. Simple, and glorious.

[Toddsterpatriot]

gurgle, gurgle [bong hit]

All this talk about hamburgers is giving me the munchies!!

[traumer]

"Overnight, those cheap goods in Wal-Mart, which are the no-think economist's facile justification for Wal-Mart's decimation of communities, small businesses and employment, shoot up in price... "

GOOD MORNING America !!

[1rudeboy]

By all means, you must rush to the local McDonalds. Pump those manufacturing numbers up! LOL

[Toddsterpatriot]

If one does not see it within three feet of one's nose, it does not exist. Simple, and glorious.

I think that's called wearing blinders. Sure makes life easier.

Check this out.

If the critics of trade were correct, the trend-line would be sloping down—that is, the more rapidly imports grow in a particular year, the more depressed we would expect manufacturing growth to be in that same year. A dreaded “flood of imports” should mean slower growth or outright contraction of manufacturing output, while a slowdown of import growth should bring relief to domestic producers and thus spur faster domestic output. In reality, the opposite proves to be true.

Since 1989, accelerated growth in real manufacturing imports has been strongly tied to accelerated growth in domestic manufacturing output. Indeed, the correlation is almost uncanny, with no year straying far from the trend-line.[3] Years of rapid growth in manufacturing imports are also years of rapid growth in manufacturing output, and years of slower growth in imports are years of sluggish growth, or even declines, in domestic output.

Specifically, the years 1989–91 and 2001–2003 were periods of low growth in both imports and output. In contrast, the years 1992–2000 saw robust manufacturing output growth coupled with robust manufacturing import growth. Consider two recent years at opposite ends of the line: In 2001, manufacturing output fell in the United States by 4.0 percent, but the fall in manufacturing imports was an equally sharp 4.7 percent. In 2004, manufacturing output rebounded with strong growth of 4.8 percent, accompanied by strong import growth of 12.5 percent.

One explanation for the positive link between imports and output is that American producers themselves are major importers. In fact, about half of the goods imported into the United States each year are not for consumers directly, but for U.S. businesses. American firms import capital machinery, industrial supplies and materials, and petroleum and other raw materials that allow them to produce final products for sale to consumers. As American-based companies ramp up production to meet rising consumer demand, they must import more capital goods, intermediate inputs, and raw materials to keep the assembly lines humming.

Free Trade Bulletin

I guess all those people working for these manufacturers should quit out of guilt from using foreign parts and materials. That should help our employment and manufacturing picture, huh?

[Toddsterpatriot]

They couldn't be easier targets if they tried. Unless..... could these be DU'ers trying to make FR look bad by repeating that stupid hamburger/manufacturing stuff?

[1rudeboy]

Nah. They're simply taunting us. That's why the proper reaction is ridicule.