The United States dollar remains the world's only reserve currency since the end of the second world war or to be very precise, from the 1970 when America moved away from the traditional gold reserves. Everything in the world's economy today (goods and services) is dollar-priced, dollar-rated and dollar-based. The official national currencies of all the nations of the entire human universe are all tied to this almighty American dollar. The oil that remains the major source of energy worldwide and it is needed to power all the developing, emerging and developed economies is dollar-priced. The entire stock markets, international financial transactions between banks worldwide, gold and all precious metals that drive global trade and economy are fully tied to the powerful American dollar. The nations of the world today all have their national debt profiles, GDPs, economic growth rate indicators, global poverty rates and their foreign reserves in the American dollar.
Today, American dollar is facing two major challenges that can shape its future and the global economy either for good or for better. The first major challenge to the powerful America dollar today is the internal or the domestic forces that are coming from the present state of the entire America's national economy today. The second big challenge is based on the first challenge to the American dollar and this second challenge is coming from the major players in the global economy, such as China, Russia, France, Japan, India, Brazil and the rich Gulf oil nations, because of their fear or uncertainty about the future of the American dollar. This fear is forcing these nations to begin to seek and plan for an alternative international currency if the worst that is anticipated about the American dollar eventually happens in the nearest future.
The American national debt is now about $16 trillion and it is almost equally to her entire annual GDP. This debt is now almost unmanageable if this annual rising debt will be left unaddressed by the broken politics in Washington and by the worst 112th Congress that put their own party loyalty and ideologies above the national interests of America and the American voters who elected them to power. The America's tax master, the Internal Revenue Services (IRS) brings in about $4.5 trillion annually from taxing the 160 million American workers and businesses. The yearly expenditures of the American government is about $5.5 trillion annually at the present moment, thereby resulting in $1 trillion annually as deficit that is borrowed from foreign creditors and it is adding yearly to nation's debt and also preventing America from buying down on her huge foreign debt.
There are two practical answers to the reduction of the America's national debt or deficits today:(i) The reduction in all the government spendings by cutting down on most of the government financed and subsidized programs in America and around the world. The programs are defense, foreign missions and aid, foreign military bases, Medicaid, Medicare, Pell Grant, food stamps, unemployment benefits, free public education and federal prison expenditures. (ii) The second practical approach is to increase the government revenue base by increasing the tax rates on the incomes of the 2% richest Americans, capital gains and the big corporations instead of the tax breaks that they have enjoyed for a decade now.
The biggest problem with these two practical answers to the America's huge foreign debt is the dirty and the broken politics in Washington today that has no room for the politics of compromise and the politics of national interest instead of the politics of party loyalty, politics of special interests and politics of two parallel economic ideologies that will never meet at any point, but have taken over the minds and the hearts of the 112th do-nothing-Congress since the onset of the presidency of Barack Hussein Obama in 2009.
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