A Superpower in Decline: Is the American Dream Over?

It will also be a test for the relationship between China and the United States, which is already tense at the moment. The Chinese have pegged their currency to the dollar, which keeps the value of the yuan artificially low. This allows the Chinese to supply cheap goods to the world. Until now, the two economic powers had a pact: The United States would buy cheap products from China, while the Chinese would invest the dollars they had earned in American treasury bonds. This enabled the Americans to live beyond their means and the Chinese to keep the value of their currency artificially low.

But even this arrangement has not fared well. The imbalance in the American balance of trade became too large, and with it grew the Chinese dollar reserves, which are now estimated at about $2 trillion. If the United States puts too much money into circulation, these reserves will be in jeopardy. Beijing, which the United States needs as a partner, fears as a rival and hates as a world power of the future, will hardly continue to keep up its end of the bargain. This is why the Americans want to see the yuan revalued and, if necessary, to impose import duties on Chinese goods, which would lead to a trade war and a worldwide recession.

The US, of course, is right to complain that the Chinese are keeping the value of the yuan artificially low. But at the same time, the US is manipulating the valued of the dollar via monetary policy. Axel Weber, the chairman of Germany's central bank, the Bundesbank, abandoned his diplomatic reserve for a moment on the sidelines of the IMF annual meeting. "Competitiveness is gained within companies, not on the foreign currency markets," he said heatedly. Exchange rates, Weber added, should "reflect a country's key economic indicators."

It will be dangerous for Europe if the Chinese and perhaps the Japanese, as well, counter the devaluation of the dollar with the renewed devaluation of their currencies. That's when currencies become weapons. "Our currency -- your problem," the phrase then US Treasury Secretary John Connally coined in 1971, referring to dollar, is gaining a new meaning.

Big Enough to Trigger Future Crises

Everyone would lose a currency war, especially the Europeans. If the European Central Bank (ECB) remained neutral, the price of the euro would climb rapidly. German products would become more expensive worldwide. And if ECB President Jean-Claude Trichet and his associates in Frankfurt's Eurotower jumped on the devaluation bandwagon and also catapulted their currencies onto the markets, price stability in Europe would be in jeopardy. One of the biggest losers in such an escalation would be Germany, currently the world's second-largest exporter.

It could certainly be a comfort to the Germans that the United States is no longer so powerful that it can foist its ideas on the rest of the world. Almost 45 million Americans are considered poor, with 4 million falling below the poverty line in 2009 alone. The Department of Agriculture warns of growing "food insecurity." One fourth of all children in the United States depend on government food stamps. But the American patient certainly remains powerful enough to trigger future crises.

One man who has disagreed with the people on Wall Street and at the Fed for years is Dov Seidman, a philosopher and management consultant from California, who moved to New York a few months ago. Seidman writes books and gives speeches, and his company, which now has 300 employees, is expanding.

Seidman is concerned about things like ethics, sustainability and a different way of thinking in America. One could also say that Seidman is interested in a new American dream.

Sitting in his office on Fifth Avenue in Manhattan, Seidman says: "We'd have to be seriously worried if we, as a country, simply chose to fix and get back to the same behavior that got us into the crisis. The problem with the American dream has been during the last couple of years that people believed they deserved it, that they somehow were chosen because they were Americans. They thought you could rent or buy the dream."

Earning the American Dream

There are ultimately two kinds of crises, says the economic philosopher. There are what Seidman calls the "end-of-life crises," the wars and natural disasters, and then there are the "way-of-life crises." He says that the current crisis must serve to question and change our way of life.

Seidman recalls the America of Obama's election campaign, when everything seemed possible. "I really hope that those who hate and yell are so visible only because they are louder," he says. "We would be in serious trouble if they actually are the majority."

Seidman, for his part, dreams of an America that starts producing products that are needed, products that are competitive and create jobs because they serve a new market, such as the market for renewable energy. He also dreams of honesty and the end of greed.

He believes that every politician and every business executive must realize by now that crises are happening with growing frequency, because each country is connected to all the other countries. "If every crisis affects everybody, shouldn't that lead to everybody being concerned about sustainability and recoverability?"

"The American dream," Seidman says finally, "is within us. It's in our DNA, our history. With our mentality we have to get back to where we once were, after World War II: dream the dream; work for it; earn it."

By Klaus Brinkbäumer, Marc Hujer, Peter Müller, Gregor Peter Schmitz and Thomas Schulz

• Back
• 1
• | 2
• | 3
• | 4
• | 5
• | 6

• Part 1: Is the American Dream Over?
• Part 2: The Ownership Fetish
• Part 3: America's 'Perfect Storm'
• Part 4: The New American Nightmare
• Part 5: A Brighter Future?
• Part 6: The Danger of Currency Warfare