Running on Empty, Part V
When the Dollar is Broken, What Does One Do to Not Go Broke? (Guest Post)
Contemplations on the Tree of Woe wrote Running on Empty, a three-part analysis of the petrodollar system that was so full of woe that it ran a full four parts. That’s 33% more woe than had been promised. Because we thought the series represented the kind of deep-dive analysis that we admire, we asked the Tree if we could print Part I as a guest post. You can find that piece along with links to parts II, III, and IV here.
Part I of the series explained the origins of the petrodollar system, and noted that it’s the first reserve currency not backed by gold or other precious metals. We’ve made similar comments about the disaster started when US banks in conjunction with the government created the Federal Reserve, and then took the US off the gold standard in 1971.
Part II of the series explained how the system enabled the Federal Reserve to print increasing amounts of currency and enabled Congress to run increasing deficits. Because the US could print dollars for free, we did so and sent them overseas in exchange for foreign goods. This hollowed out the manufacturing base of the US and led to a decline in living standards for many Americans at the same time that the people decrying inequality were pursuing policies that led to more of it.
…click on the above link to read the rest of the article…