A Debtor Nation

A Debtor Nation. America used to be a creditor nation(we loaned money to other countries) However, when the Savings and Loan collapse happened in the 1980s we became a debtor nation because so many of our loans to Central and South America defaulted which collapsed the Savings and Loans. This problem was compounded by the incredible waste of money and debt created by the Viet Nam War. This combination of events led to the United States moving from a Creditor nation to a debtor nation.

So, now we have been a debtor nation for about 20 years. So people in other nations have kept us afloat. They are starting to disinvest in America because they can no longer get enough return on their money. This along with the subprime debacle is driving down the value of the dollar. Because of this it may eventually be necessary for the United States to go back on the Gold, Silver or Platinum standard or a combinations of those three or more commodities because floating the value of a dollar on our Gross national product is failing. If we leave it the way it is the value of a dollar could theoretically keep in free fall indefinitely. As it is in relation to the Euro the dollar already has dropped about 30% in value compared to what it was 5 years ago. Look at the graphs! The continued slide of the dollar, even though it might help American exporters and foreign tourists trying to visit the US only steals the value of the dollar from Everyone who uses dollars world wide, including everyone living in the United States.
the price of oil in the value of our dollar 5 years ago in relation to the Euro would be 30% less or 70 dollars a barrel in real value of a dollar 5 years ago against the Euro. 70 dollars a barrel makes a lot more sense than 100 dollars a barrel. All the added valuation of oil in dollars is only the dropping value of the dollar during the last five years in relation to the Euro.

Another important fact if one is going to get real about all this is that the real valuation of the stock market is not really 12,500 or whatever it is right now. Adjusted for the dollars of 5 years ago the real value in those dollars would be 30 percent approximately less than the 12,500 or whatever it is today. I calculate this is approximately 8750. So in the value of the dollar against the euro five years ago the real value of the stock market in the US would be 8750. This is only around 1700 points above the crash after 9-11. Reality check!

I was listening to market analysts today and one of them said the only reason the stock market seems as stable as it is is because the devaluation of the stock market is mostly occuring in the devaluing dollar rather than stock dropping precipitously and staying down. So the illusion that the market is volatile but relatively okay is an illusion on the world market created by the dollar in free fall.

In order for all of us to make useful decisions all the relevant data must be plugged in which is not being done by most people now.