13 November 2010


Who could ever have imagined that the US would take a position to the left of the rest of the world on economic affairs, even to the left of China and Brazil? But this is what has occurred on the President’s Asia trip, culminating in the G20 summit, which has largely been a failure. The “world” wanted Obama, and has him now, but the US is now coming across like a weak sister, rather than the world’s leading economic power. We have the improbable situation of the Chinese lecturing the US on free markets, and the Germans on currency stability. Unfortunately they are right.

The President attended these meetings already weakened by the election results, and further diminished by failure to gain agreement on a single objective. No one should want the President of the United States to be weak vis a vis the rest of the world, but that is where we are now, and we can only pray that no major international crisis erupts over the next two years, considering the hand we have been dealt. From its apex in recent years American power is now at its nadir.

The position the government has taken makes us look ridiculous and hypocritical. How can we possibly expect complaints about currency manipulation to be taken seriously when we ourselves are printing money to inflate the economy and weaken the currency? How should the rest of the world react to the world’s reserve currency being manipulated for political ends, while they are stuck holding trillions of dollars? We are the ones introducing instability into the world economy rather than stable predictability. It is no wonder that all of the administration’s proposals were rebuffed by the G20, with foreign governments uniformly taking the more conservative position. This is a major embarrassment. Never has the US been so diminished. It reinforces the notion that American power peaked with the Bush administration, and now is on an inexorable decline. We have an administration that actually wants to push this process along, while remaining clueless about international as well as domestic problems.

But there is nothing inevitable about American decline. It is the result of destructive fiscal and monetary policies that are taking us in the wrong direction. This can still be rectified by very strong budgetary restraint with an eye towards reducing our debt burden, and an end to funny money policies that are certain to induce inflation. Prices of commodities are already increasing steeply and higher prices for consumers are a virtual certainty. We need a government that will be committed to price stability, a strong dollar, and maintaining America’s pre-eminence in the world. That can’t happen fast enough.

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