Whither the Dollar?

World Tries to Buck Up Dollar
http://online.wsj.com/article/SB125798819587744477.html?mod=djemITP#articleTabs%3Darticle

If foreign central banks buy dollars to protect their trade, that shouldn't matter if the US had its own economy in shape - which it doesn't.

As Milton Friedman said so many years ago – “eventually they have to do something with those dollars”.

It is lucky for the US that those dollars are there since we are borrowing so much and saving so little as a country.

The US has had the choice of cutting back spending and it has chosen, as have so many state and unions, to just try and spend even more. It would strike one as the height of idiocy if done as a family budget - why is it so different if done by government?

As when a family gets in debt, they either use Chapter 13 and restructure and try to repay most of the debt or they do Chapter 7 and wipe the debt away.

Since it is relatively unlikely that the US (although maybe not all of the states) will try not to do Chapter 7, the longer we keep up the spending (i.e. Nancy and her health bill), the harder it will be. The actually spendable part of the (family/government) budget will be less and less and the amount going to repaying past debts will be larger.

So far the US is just spending like no tomorrow and cutting back nothing.

If one thinks about the Obama administration's union-directed goal of a weak dollar to try and retain manufacturing (read: union) jobs with high wages and benefits, one immediately thinks of California and New York where the states are in financial duress with jobs leaving the states and wondering - "do each of these states have their own currency?".

Of course, the answer is "no".

What liberal spenders can't seem to understand is that government is spending too much and the incentives for business and job creation in the US are too weak. High taxes, high healthcare costs, etc. all militate against job creation.

Last nights news shows were replete with discussions of not just a "jobless recovery", but also about how companies don't want to hire any employees. That's the shocker - minimal to no added employment.

This ought to be a wakeup call to the administration and Pelosi and her pals. But, of course nothing is said.

Senator Warner nailed it in the last few days when he stated to the press that the government is trying its health bill because it knows it can't afford the current medicare and medicaid programs and doesn't want to confront the fact. So, it wants to take away the chance of young people to buy homes and pay off their student loans so its social spending can remain unconstrained. This is unconscionable - unless, of course, you're a free spending liberal who look to take from every worker to provide for non-workers.

It appears as though the pit of unemployment and economic stagnation and decline is steepening ever more quickly as the administration seems to have no handle on turning around programs that not only don't work, but have been signaling their failure through both Democratic and Republican administrations.