No. of Recommendations: 5
Jennifer Burns, assoc professor of history at Stanford and research fellow at the Hoover Institution, a conservative leaning think tank, has the best short explanation of the relation of Trump's tariffs and geopolitical issues that I've seen so far
The US Dollar has served as the reserve currency for a long time. Towards that end some fairly sketchy things have been done to American's in the past by our own government. In particular,
In 1933, our dear leader Franklin D Roosevelt confiscated all the gold held by Americans and ended the ability of American's to trade their US Dollars for gold. Why? So that we could continue to support foreigners being allowed to trade THEIR US Dollars for gold. To futher nail down the conscription of American's into the cause of treating foreigners better than Americans in order to keep the gold standard for them, it was actually ILLEGAL for American's to even own Gold, which prohibition was kept in place until the 1970s.
So now what is the price Americans pay to keep the US Dollar attractive to foreigners as a reserve currency? Well one price is that employment in the US no longer includes reasonably high paying jobs that the bulk of Americans can get and use as the basis of a middle class way of life. We traded a bunch of manufacturing jobs for "Do you want fries with that?" jobs.
I don't let my children run up credit card debt to pay for their current consumption. Why should I let our government and other American's do it? Especially when it is at the expense of a middle class whose income is stagnant while a minority of our workforce gets richer and richer?
If we manage to de-value the US dollar to the point that we have a lower trade deficit, and even better, a trade deficit which stops growing faster than our economy is growing, and that results in a lower government deficit and a higher rate of pay for the bulk of the American workforce, then that sounds good. The idea that this will stop the rest of the world from using the US Dollar as its go-to reserve currency seems far-fetched. We abandoned the gold standard in the early 1970s and then had epic inflation through the next decade or two and that didn't stop the US Dollar from being the reserve currency. I don't think putting the dollar back on a basis that supports approximately balanced imports and exports between the US and the rest of the world is going to do what giving up on gold and having double-digit inflation couldn't do in the past.
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