Home > Uncategorized > “Rebalancing”


Everybody’s talking about rebalancing lately.  See yesterday’s WSJ headline, and below the fold.  Meanwhile the Fed is monetizing the debt driving the dollar down.  So what is the big picture here?  It’s actually quite simple.  We’re (America) consuming too much and producing too little.  What they mean by “rebalancing” is a global arrangement that will get you to work more and send the produce of your labor to some other country. 

Now I’m not saying we don’t need that we probably do.  But the reason we need it is because they used managed trade and currency manipulation to create a world economy where the rest of the world works to produce things for our consumption without receiving something of equal value in return.  Instead, our main export is debt which is the promise to supply something of real value in the future.  But this system can’t go on forever, eventually we have to make up the deficit.  So now they’re trying to use managed trade and currency manipulation to achieve the opposite. 

But the real head scratcher in all of this is not what they’re doing, it’s the way that they act like this is going to be great for America and require everyone else to sacrifice.  It seems to be every country’s goal to produce as much as possible for someone else’s benefit and they’re fighting over who will have to suck it up and consume it all.  We have created a global economic system which has turned our logic completely upside down.  It’s turned us into altruists without us even realizing it!

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