Holiday shoppers send U.S. dollar into downturn

Americans dashed off to retail outlets following Thanksgiving, marking the unofficial beginning of yet another holiday buying binge. This happened in spite of recent warnings from Federal Reserve Chairman Alan Greenspan about the unwillingness of foreign governments to subsidize deficit spending in the United States.

Greenspan commented that the multitude of holiday shoppers could send the value of the dollar into a tailspin, forcing the Federal Reserve to raise interest rates in order to attract foreign investment. This may lead to "a spectacular wave of bankruptcies" said Stephen Roach, the chief economist at Morgan Stanley. In other words, a "financial reckoning day" is coming for the United States, and it could very well make the 1930s depression look like a walk in the park.

Blissfully unaware of their current predicament, 133 million shoppers bought an average of $265 worth of stuff they do not need, and cannot afford. The consumer debt in the U.S. is at an unsustainable $2 trillion (which in a previous column I errantly stated to be at 11 trillion), and the average household has 10 credit cards with with an average of $8,000 of total debt, excluding mortgages. In order to sustain our consumption, we must attract a whopping 80 percent of the savings of the entire world. This whole house of cards is about to implode and Americans are out shopping, deepening the impending crisis.

Our one in 10 chance of averting catastrophe is reduced by the reckless financial policies being pursued by the Bush administration. Their endless deficit spending has compromised the collective future of our generation. Over the years, we will be paying more in taxes, receiving nothing in return. This is an enormous burden to place on the youth, but Washington has more important things to worry about — like maintaining and expanding their positions of immense power and privilege.

Of course nothing lasts forever, and Americans cannot possibly hope to consume a disproportionate amount of the world's resources for long. The entire world economy is rigged in favor of the dollar and U.S. hegemony. Oil is priced in dollars, and the dollar is the default reserve currency of central banks around the world. Foreigners are starting to wake up. Commodities, especially oil, will rise in price as the dollar fades. Imports will become more expensive, and stores like Wal-Mart and Target, which rely heavily on imported goods, may not survive.

The Bush administration has been attempting to conceal the economic weakness with a bellicose foreign policy. The one area in which the U.S. is still head and shoulders above the rest is in its capacity for violence. This will be used to try to hold onto the increasingly precarious economic position in which we find ourselves. It's not a pretty picture, and not one you are likely to hear about on CNN. It's time that we start taking action to mitigate the worst of the likely consequences of our economic predicament.

Sterling Harris is a history major at CSULB.