CHAPTER 11
The Emperor with No Clothes
Let me repeat: To many, the abolishment of the gold standard remains the key monetary event in sowing the seeds for the current environment of perpetually intensifying imbalances.
I find it difficult, philosophically, to disagree.
• The reality—the global economy is more dependent than ever, on credit.
• The reality—the global economy is more dependent than ever on the U.S. dollar (USD).
• The reality—the global economy has been built to produce the cheapest goods possible, for consumption in the United States, and the competition to do so intensifies every day.
• The reality—the U.S. consumer has no savings.
• The reality—the real wage-derived income is deflating.
• The reality—the U.S. consumer is more dependent than ever on housing for paper wealth.
• The reality—China, Japan, Korea, Singapore, Malaysia, India, Taiwan, and the Philippines are simply unable at this point in time (nor any time in the foreseeable future) to consume anywhere near the volume of goods they produce.
• The reality—China, Japan, Korea, Singapore, Malaysia, India, Taiwan, and the Philippines have been willing to perpetually accumulate U.S. dollars in return for competing to sell their goods to the U.S. consumer.
In short, reality can be defined with four sentences:
1. Every single day for more than 30 years, since the abolishment of the gold standard (and before), global imbalances that are linked to trade, savings, reserves, exports, output, consumption, and debt have intensified ...

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