Imagine for a second that you are sitting in Asia with a pile of money. Where are you going to put it? Rather, where else could you put it but the U.S.? Sure, there's the old homeland stash in case you need to skip the country. There's the stash in Cuba so if all else fails, Fidel will give you sanctuary. But where does the safe money go, now that the Euro is just not the bet it appeared to be before?
What country boasts political stability and economic reliability such that your wealth would be reasonably safe from erosion?
The United States.
Given that change in international capital dynamics, Econo-Girl revises her opinion about the U.S. economy heading for a brick wall. I mean, how long can we live debting like this? As a nation? Hmmm. A bit longer, I think. Now, everyone has a vested interest in floating us loans. This is not a permanent strategy and reminds Econo-Girl of mercantilism. But instead of goods, it is cash. Let's review.
In mercantilism, the raw materials were brought from colonies to be processed in the imperialist one in the center of that system. Those were the high-paying jobs, making the raw material into usable goods. Then those goods were shipped back to the colonies and sold to the colonists. The cash would go back to the center country.
Today, the goods and raw materials are brought into the center nation, the U.S., who buys them. Those exported dollars are lent back to the U.S. by the 'colony' countries to buy more goods. If we follow the cash flow, it mirrors the flow of raw materials and goods in mercantilism.
Again, the U.S. imports goods, transforms them into U.S. dollars and exports those dollars. The exported dollars are then sent back to the U.S. to be used to buy more foreign goods. The high paying jobs are staying in the center nation. The low-paying jobs are in the periphery.
So what is the U.S. really exporting with these dollars? A sense of security and stability. Low-paying jobs. Economic life support for other nations whose domestic demand for goods has shrunk, which is many of them. Reinforcing the sense of security exported by the insatiable U.S. consumer.
Econo-Girl has said before that the entire system has to end. She is reminded of the Hitchhiker's Guide to the Galaxy, where the economy of an entire planet was based on shoes. But now that Europeans have rejected a constitution, there is hope that the air can be let out of that balloon slowly, and yes, painfully. But what an improved scenario! Thanks, Europe!