A Superpower in Decline: Is the American Dream Over?

Part 6: The Danger of Currency Warfare

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

Translated from the German by Christopher Sultan

Article...
  • For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the "i" symbol.
  • Post to other social networks

Comments
Discuss this issue with other readers!
23 total posts
Show all comments
    Page 1    
1. If 1/3 sit in front of computers, of course low standard of living
lakechamplainer 11/01/2010
I think the main reason US standards of living have stagnated is the ocmputer, for several reasons 1. Simply put, if 1/3 of the workforce sits in front of the computer, 1/3 of the work force is not doing something productive - farming, making furniture, teaching, cooking, etc. 2. Computers are used by management to monitor employees, which limit productivity 3. Capital spent on computers, which is almost all not providing a real return on investment, is capital not put into productive use. There are some good uses for computers, for example on controlling/monitoring high speed, high quantity production or assembly or packaging lines, but these are the exception to the rule.
2. Florida
esperonto 11/02/2010
Goodbye to it. Florida was always a skid row state, coursing with drug addiction, prostitution, voodoo, mafia, Cuban terrorists, and hurricanes. You see the failure of this new suburban retirement planning, but in fact this is only a small superficial section of Florida. Much of florida has always been homeless, poor, police brutality, and skid row. You can search through youtube to see pictures of police cutting up the tents of homeless people, young kids beating up homeless. The dream was only a superficial segment of Florida, that excluded much of the population. That is the most naive thing of all. For a state with only a shallow sense of community and grift work for old retired rich people and down to earth, straight forward Mexican slavery with all the bells attached. To me the only wonder is that people only feel sorry for these oblivious home owners! This is shot in Saint Pete Florida, a relatively small city: http://www.youtube.com/watch?v=LrPdZmPB36U The reason they do that is not just about the physical act of removing homeless. Its psychological harassment to criminalize the minds of the tent owners. After their tents are cut up, their minds become more guilty, and they have more of a marked look. Normal people will realize they have been marked subconsciously. That is the mentality of the American South: guilty until proven innocent. I guess if I was a genius like these police I would understand that being smart and successful means being ruthless. Really smart people hate the poor and want to destroy them. When you are really smart and well pampered, nothing is better than killing the poor, destroying their homes in Palestine, or killing them in Afghanistan. When you are really intelligent, rich and successful, nothing is better than eating human flesh. Maybe you would care for a tomato instead: http://www.gourmet.com/magazine/2000s/2009/03/politics-of-the-plate-the-price-of-tomatoes I know, If I had some self respect and pride or patriotism, I could kill and enslave the poor with a clean conscious like normal sane people. Then I would only worry about some middle class home owners and take the idiotic European view of the "American Dream". If I believed in the God, I could enslave and kill like a real Christian.
3. American dreams are at loggerheads
sirajul 11/02/2010
A great article by Spiegel, and I like to thank Spiegel staff writers Klaus Brinkbäumer, Marc Hujer, Peter Müller, Gregor Peter Schmitz and Thomas Schulz for this thorough 6-part story on America's past, present and future. With the midterm elections holding today, and both Democrats and Republicans distancing themselves from the brand America, the country’s leadership, as hinted by the storywriters, is coming to an end. Indeed, American leaderships have had hands in the initiation of the losing, though not publicly. Many months before the actual changing of the America, a political swing is on the move. Its scope and extent remain unclear, yet the seeds of a new foreign policy have clearly been implanted. The earlier strategy, which treated diplomacy as a second choice and saw the military pre-emptive strike as America's fundamental right, has verified to be unsuccessful. Despite the consequences of who are going to be the actual rulers in America, the return of the ‘Right’ is alarming. ‘The demonisation of political opponents, the end of debates, the condemnation of intellect, these are all maybe ominous signs’ that the American dream is over.
4. computers
esperonto 11/02/2010
Zitat von lakechamplainerI think the main reason US standards of living have stagnated is the ocmputer, for several reasons 1. Simply put, if 1/3 of the workforce sits in front of the computer, 1/3 of the work force is not doing something productive - farming, making furniture, teaching, cooking, etc. 2. Computers are used by management to monitor employees, which limit productivity 3. Capital spent on computers, which is almost all not providing a real return on investment, is capital not put into productive use. There are some good uses for computers, for example on controlling/monitoring high speed, high quantity production or assembly or packaging lines, but these are the exception to the rule.
Lets not forget computers control heart machines in hospitals, etc. I don't think computers can be blamed entirely. And you know farming and furniture making still go on, but as you know, capitalism has monopolies on small business. If IKEA makes furniture, how can I make furniture? If a giant corporation owns many hog farms, how can a normal person own a hog farm? Nevertheless, there are many people who are still farmers, furniture makers, etc. One thing that may have suffered is fine art. Painting, drawing, and many of the fine arts that were more prominent in the 1960s before computers are now completely passe. Also there is a "buy local" movement to counteract your problem of online shopping. At least where I live, people are encouraged to "buy local". I have seen it in other towns as well. I think the movies people watch decrease the standard of living. I was on a greyhound bus recently and it had movie screens in it that played an extremely stupid movie. Though I couldn't hear it, because I refused to put on the earphones, these monitors were reflected all around the bus in the windows at night. I was bombarded by one of the most stupid movies I have ever seen about someone who works in the house of congress who becomes Noah and builds an ark. I felt after I had seen its flickering mobs of bamboozled actors that my quality of reality had been reduced, even without hearing any audio. Its no wonder I have no TV and mostly watch older movies that have no special effects or CGI graphics. Definitely TV, Mass Media, and Hollywood films these days are reducing the population to very shallow reality. I have been very picky to choose only real socialist news and older movies with bad camera work and live action stunts where appropriate. Look at this for instance. I dont like the song so much, but this guy goes crazy. He jumps around with a kind of energy they don't have at all in these computer generated imagery movies. He does backflips off the wall. I am not even that old. This way before my time. http://www.youtube.com/watch?v=FW02c5UNGl0 Hong Kong films used to be like that in the 1980s. Stephen Chow for instance is extremely good. Many Kung Fu films are also quite good for this kind of humor action. A fat guy is often his side kick. The fat guy is maybe even as funny as him. He dresses up as a girl sometimes. http://www.youtube.com/user/tithya0youtube#p/u/206/hnMwKnkeYGY CGI just gives like magic powers to the director. It provides too much fantasy. The plots of these films get really stupid. I mean, Congressman transforms into Noah? Retarded. Still, some computer art is quite good, like this comical portrayal of Evelyn Rothschild and Rockefeller: http://www.youtube.com/watch?v=B7Tz8l-t1o4
5. Travel
esperonto 11/02/2010
Zitat von lakechamplainerI think the main reason US standards of living have stagnated is the ocmputer, for several reasons 1. Simply put, if 1/3 of the workforce sits in front of the computer, 1/3 of the work force is not doing something productive - farming, making furniture, teaching, cooking, etc. 2. Computers are used by management to monitor employees, which limit productivity 3. Capital spent on computers, which is almost all not providing a real return on investment, is capital not put into productive use. There are some good uses for computers, for example on controlling/monitoring high speed, high quantity production or assembly or packaging lines, but these are the exception to the rule.
I have used computers for so much though. Once I got a job online in Turkey. I ended up going there for 9 months! All because I applied for a job online and emailed to a Turkish business owner. If it were not for internet, I would never have been in Turkey, so I can thank computer for that. Computer is very fun for me. I use it mainly to gather information. For instance, if it wasn't for the USA Esperanto website, I might not speak Esperanto. I did a mail order course with them for a certificate. It was by normal mail, but essentially I applied for it online here: http://esperanto-usa.org/ Educational tool unparalleled. Now I can read a book in Esperanto almost fluently.
Show all comments
    Page 1    
Keep track of the news

Stay informed with our free news services:

All news from SPIEGEL International
Twitter | RSS
All news from World section
RSS

© SPIEGEL ONLINE 2010
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH



Graphic: A Nation in Debt Zoom
DER SPIEGEL

Graphic: A Nation in Debt


Graphic: The Fed's Tools Zoom
DER SPIEGEL

Graphic: The Fed's Tools

Graphic: The Rise of Unemployment Zoom
DER SPIEGEL

Graphic: The Rise of Unemployment


Graphic: The Decline of Industry Zoom
DER SPIEGEL

Graphic: The Decline of Industry


European Partners
Presseurop

Politiken

Corriere della Sera

One Million Erasmus Babies

ASEM Summit Paralyses Milan


Facebook
Twitter