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Originally Posted by kane
So let's go through these ideas.
Idea #1 - We default on the debt. Not a terrible idea. It will wreck our ability to get loans from other countries and those countries that invest in ours may pull out, but the debt is gone. Then what? This will most likely cause all kinds chaos and economic trouble which we would have to recover from. We could, but how, unless we lower our standard of living dramatically or lower the cost of things dramatically we can't manufacture on a level where we would be able to compete with other countries. So we have no debt, but we still have no good jobs, unless I'm not seeing something here.
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Our standard of living is going to be lowered once the dollar is no longer the reserve currency, and all the treasury securities come flooding back to our country en masse. At least with a default, we can start off somewhat fresh and build up again. But yea, it does get rid of our debt.
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Idea #2 - Get factories up and running to full capacity again. So again, I ask what would we make that we could sell to the world that would be either cheaper or so much better that we could compete with third world countries who can pay 1/100 of the labor cost.
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We reached our economic apex in the 50's not because our stuff was necessarily cheaper, but because it was better quality. I would pay more money for better quality shit than buy something cheap from China. The problem is, our reputation regarding quality products has gone to shit. And the formation of unions don't help either. The fact is though, the unemployment problem would be solved and if ANYTHING, a manufacturing sector would drastically increase domestic demand, which is what we need. China is doing that now.
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Idea #3 - Back to the gold standard. Nice idea, but we would have to see a major adjustment in prices for this to happen and we would have to see a big reduction in the amount of actual currency out there. This could happen and it would help reestablish the value of the dollar, but how exactly is this going to create jobs that pay more than minimum wage?
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Well, that's how the gold standard works. When the dollar is covered by gold through lets say a 20% Gold cover clause ratio, prices will all go down. For instance, instead of 100k you'd be making 30k and that would never rise because our money is backed by something tangible. All of these bonuses and income increases are illusions. You'd be making 30k but everything would be so incredibly cheap, your standard of living would actually be higher. And being on the gold standard, minimum wage jobs would actually increase the standards of living for those people because prices would be ridiculously low.