Why We Don't Make Things

Listened to podcast on a dog walk called “KunstlerCast” and a fellow named Tom Luongo lays it all out. 

“To continually grow global GDP we need to grow the supply of dollars in order to keep them both in reserve (in everybody’s central banks) and enough of them out there to flow to liquify global trade.  The dollar is three things: a medium of exchange, a unit of account, and a store of value. Where I think we went wrong with dollar reserve system is say that the dollar needs to be all three of those things at the same time concurrently. This leads to the issuing country of the world’s reserve currency has to run a constant trade deficit to liquify the world with enough dollars to keep global trade from collapsing. That’s where we are. That keeps the currency of account stronger than it should be because we’re exporting the inflation we should be experiencing because the dollars are all going overseas and it distorts terribly our economy and gives us the false sense that we don’t have to produce anything, all we have to do is produce money and then we get goods. We don’t have to make the goods themselves. Eventually the dollar should collapse but I don’t see it happening soon or rapidly.”