Friday, November 26, 2004
YOUR LIFESTYE WILL SOON CHANGE
The reason for this is simple. The burgeoning budget deficit. Since 2001, virtually all of the trillion dollars of new debt has been financed by foreign banks. However, as alarm spreads about the growing deficit, this is beginning to change. Russia is starting to convert some of it's dollar reserve to Euros. Japan and China, who up to now have been financing our debt in order to keep us buying their goods, are starting to reconsider. China is threatening to stop tying the value of their currency to the dollar and tie it to the average of the euro, pound sterling, and swiss franc instead. Opec s threatening to demand payment for oil in euros instead of dollars/
So what does it mean to you. Well, as the value of the dollar drops, everything we purchase from overseas becomes more expensive. Consumer goods from the far east, oil from the middle east, natural gas from Mexico and Canada all become more expensive. Which means the value of your paycheck decreases.
Robert Reich is a guy who knows a bit about these things. He is formerly Dean of the Harvard School of Economics, was Labor Secretary under President Clinton, and is currently teaching at Brandeis University and contributing editor at American Prospect. His take? He strongly suspects that the Bush Administration is waging an ideological war to starve the Federal Government and render it unable to do much more than wage war in the future.
More important, the coming inflation will make it very difficult for families, already heavily in debt, to afford the basics: food, housing, clothing, health care. Folks, it's gonna get ugly!