There was the joke at the beginning of the session that one fellow tasked with raising money was “fluent in Mandarin.” From the chuckles, I gauged it to be a joke.
But that might prove to be the most significant point economically. The Treasury is putting pressure on the Dollar through high debt issuance, and the Fed through the creation of short-term credit to heal various debt markets. The benefits are going to debtors, not creditors. What value should the creditors assign to the Dollar? The simple answer should be less than previously. Yet, nations follow many noneconomic goals, many of which benefit the US as the reserve currency in the short-run.
The ultimate answers are complex, because they rely on how other nations will act.
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Let me try this — as the world has gone capitalist, the edge of the US has been eroded. Now we face a world where doing certain jobe should pay the same, regardless of where they are located. Wages in the US will converge with those from the rest of the world, adjusted for capital investments.
Throughout human history, “middle classes” have been abnormal. The current adjustment in the US may be showing the once large middle class that it is not a normal thing, and is hard to maintain.
There is no conspiracy. The US Government is up against economic forces larger than it can combat. The rest of the world is out-competing the US, and the US has a shrinking portion of the pie as a result.
© David Merkel; My Visit to the US Treasury, Part 7 (Final)
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