Replies

From today's dailyreckoning.com
I think it is relevant because the trade situation cannot be divorced from the currency situation.

For an entire generation, Americans have been the happy beneficiaries of a unique monetary system...in which the world's bussers and schleppers took American dollar bills in return for their work. The more dollars we exported...the more they bussed and schlepped to get them.

It was a little like the discovery of gold in America by the Spanish in the 16th century. All of a sudden, the Spaniards were the richest people in the world - for they had the world's money!

Money came in from the New World; it was as if the Spanish had a printing press in the basement and could print up as many dollars as they wanted. Even the word 'dollar' comes from that period, as Spanish money was known the world over. As the money supply increased in Spain, the first effect was inflation. Prices rose. But the second effect was the one that hurt. Rather than develop their own economy, the Spanish exported their dollars in exchange for the goods they wanted.

The Spanish thought they were rich. And, for a while, they lived rich. They were the 'world's mouth,' the leading consumers of the 16th century.

But soon the money ran out. And its overseas adventures became cost-centers, rather than sources of booty. And then the Spanish discovered something important: the easy money had been a curse; it deprived Spain of the development needed to become a prosperous country.

After the Spanish Armada was defeated by the English in 1588, Spain fell into a slump. It was the 'sick man of Europe' for the next 4 centuries.

And now it is America that is cursed by good fortune. It has become 'the world's mouth.'

As long as it has a printing press in its basement, Americans believe, they will never go hungry.

We will see, dear reader; we will see.

Over to you, Eric...

Racebannon, you've articulated the results of something that's based on one simple fact: a resident of the first world can never compete with a resident of the third world. The costs of inputs to produce our labor are simply too high, our standard of living too high, our expectations too high compared to those who we are asked to compete against.

An American engineer lives here:

Drives this to work:

Fills it up here:

...and might have lunch here:

By way of contrast, the Indian or Chinese engineer lives here (most likely with his parents, wife, AND children):

Goes to work on one of these:

...and has lunch here:

As you can see, this is a very visual illustration of why free trade is a lie. By the way - other nations have no trouble whatsoever reserving the best jobs for their own citizens.

I'm not willing to reduce my standard of living to a third world level - how about you?