3/31/2009 PERMALINK
Are all the bailouts moving us toward catastrophe, rather than away from it? With all the bailouts, two wars, record general fund deficits, and the retirement of the boomers starting this year, the United States government is piling up far more debt, far faster than any other nation in history.

This carries a huge risk of causing confidence in the US dollar to erode, resulting in the dollar losing its unique status as the world single reserve currency.

If that is allowed to happen, Americans will experience a drop in our living standards unprecedented in the history of our country, worse even than in the Great Depression.

Consider that, unlike during the Great Depression, we now import most of life's necessities -- gasoline, clothing, stoves, computers, heaters, automobiles, light bulbs, much of our food, televisions -- you name it and typically somewhere between 50% to 100% is imported today. Check the labels in you local Walmart.

We run such a huge trade deficit now, that without the US dollar's reserve currency status, foreigners would simply no longer be willing to take dollars for all those necessities we import. They would want something back of value, and we don't make very many things that we can ship back to them anymore. Most of what we produce, are thing that in tough time, people can simply do without.

The bottom line is that if the stability of the dollar comes into question, the catastrophe that could then ensue would make today's painful times seem like the good old days.

I don't think our leaders fully appreciate this risk yet. Because they are following a path that massively increase the possibly of a loss of confidence in the dollar that would cause it to lose its unique status and ultimately reduce the average American's standard of living by more than half.