I guess price controls might work to suppress the price of some goods — like corn — and wages. But what about the commodity that drives the world economy: oil? Is it realistic to expect that if a devalued dollar brings the price per barrel to, say, $150, we can “freeze” the price that consumers pay at $4/gallon? That sounds to me like it would require a lot of gov’t subsidization — with money we don’t have.
What’s happening now — which is unique from the 70s and other periods of price controls — is that the U.S. imports the vast majority of its goods. So I wonder how will price controls work when we have no control whatsoever over the sources of production? In that case, it seems to me that the free market would have to set prices for those goods. And for anyone using the American peso, that ain’t good news.
We have placed ourselves in an untenable position, out of sheer arrogance.
The saddest thing to come out of all of this — and the reason that I think we are at greater risk of collapse than ever before — is that for the first time since WWII, the dollar is in grave danger of losing its status as the world’s reserve currency. People mocked the Euro 3 years ago (I wasn’t one of them; I was buying Euros). But now that it is $1.40 to the dollar, it is undeniably a force to be reckoned with. The greenback – *sigh * – is no longer irreplaceable. There is finally a viable alternative. And the Saudis realize this.
I think what would serve all of us right now is to take off our blinders and abandon the wishful thinking, because like it or not, what is happening now in the global economy — and to the US in particular — is simply UNPRECEDENTED. There’s no denying it. Every person on this board only has a memory of the US as the strongest, most powerful country on earth. We’ve spent our entire lives with that memory, so it’s understandable that we would cling to a belief that we will pull through this, we will stay on top, that things will return to the status quo. But at a certain point, I think we all have to come to terms with the fact that the world, and the global economy, is a dynamic, organic entity, and it changes. As it should. The US wasn’t always the King of the Hill. And it won’t always be the King. Right now, we are watching as the King is de-throned…
Our lives are about to change. Better to prepare for the change rather than being blind-sided by it. That’s my advice.
