Are Americans less-evolved?

[Moonstruck888]

The UK owed a massive debt and had an economy in shambles, with over 50% of GDP dedicated to a now useless industry (the war)- and so a payment plan was worked out. First the principal was reduced, through negotiation, and then an incredibly long repayment schedule was created a with a low interest rate. Had the US wanted to take advantage of the UK, we would have set the interest rate to, say, 15%, or 10%- but certainly not below the inflation rate. Every (slight exaggeration) year we weren’t getting our money back, we were loosing money (in terms of real value) rather then earning it.

Well, you see, with 50% of our GDP dedicated to a now useless industry, what do we do? Do we put millions of people on the dole and effectively cripple the economy altogether?

That is what we were trying to avoid, but unfortunately a nudge or two from our best friends across the Atlantic assured that this was precisely what happened.

I’m not saying that what you did wasn’t legal. I’m not saying it wasn’t good economic sense and I’m not saying it wasn’t expedient politically, but is it really the way to treat a friend?

Smaller countries with weak economies have high probabilities of defaulting on loans, so they pay high interest rates.

Which proves my point, that the IMF is not a charitable organization but one that profits from the misery of others.

So despite a strong economy, a weak pound killed the British empire? A weak currency offers as many benefits as it does draw backs- the strength of the dollar is hurting our ability to export to Europe at the moment for example, and China is believed to be keeping it’s currency down to give it an edge.

A weak currency may offer benefits if you’re running a tourist resort or an export industry, but it offers none if you’re running a global hegemony. What it did accomplish was to move the seat of that evil hegemony from London to Washington.

… past 50 years?

Why not? Don’t we have a special relationship? Or are the nay-sayers over here correct that it’s a special relationship of lapdog and master?

 

[Moonstruck888]

Let’s test this then on the idea that I object the most to-

First we need evidence that the UK entered a recession in the 1960’s or some other major decline in the standard of living in Britain. (might as well stop here)

In 1940, an agreement with the U.S.A. pegged the pound to the U.S. dollar at a rate of £1 = $4.03. This rate was maintained through the Second World War and became part of the Bretton Woods system which governed post-war exchange rates. Under continuing economic pressure, and despite months of denials that it would do so, on 19 September 1949 the government devalued the pound by 30.5% to $2.80. The move prompted several other currencies to be devalued against the dollar.

In the mid-1960s, the pound came under renewed pressure since the exchange rate against the dollar was considered too high. In the summer of 1966, with the value of the pound falling in the currency markets, exchange controls were tightened by the Wilson government. Among the measures, tourists were banned from taking more than £50 out of the country, until the restriction was lifted in 1979. The pound was eventually devalued by 14.3% to $2.40 on 18 November 1967.

Then that said recession was caused by the falling value of the pound on the international market.

Lord Beswick, in a rather mealy mouthed speech not atypical of the UK parliament and Lords, conceeds that the run on the pound “is linked” to the decision to devalue the pound.

“It may be asked whether this decision to devalue was precipitated by the run on the pound on Friday, the 17th. The answer is, No. The Government’s decision was based on the actual and prospective balance-of-payments situation and not on movements of short-term capital. Of course the two are linked, and confidence in the markets was affected by the underlying weakness in the balance of payments. But our decision was effectively taken before the happenings in the markets during the few days before Saturday, the 18th.”

And then proof that the falling value of the pound was not due to payments on the anglo-american loan, but rather a ‘run’ on the pound orchestrated by the US government.

The research I’ve done would seem to indicate that lack of economic competence in the USA set in motion the run on the pound, the subsequent run on gold in Europe and the inflated value of the dollar which was as a result floated against other currencies… I must confess that this is an explanation I had not considered.

nationalarchives.gov.uk/cabinetpapers/themes/bretton-woods-system.htm

 

[tjm190]

Well, you see, with 50% of our GDP dedicated to a now useless industry, what do we do? Do we put millions of people on the dole and effectively cripple the economy altogether?

That is what we were trying to avoid, but unfortunately a nudge or two from our best friends across the Atlantic assured that this was precisely what happened.

I’m not saying that what you did wasn’t legal. I’m not saying it wasn’t good economic sense and I’m not saying it wasn’t expedient politically, but is it really the way to treat a friend?

Britain’s economy experienced over 20 years without a recession and had relatively strong growth throughout that time- I’m not sure where the idea that Britain was in severe economic trouble came from.

Which proves my point, that the IMF is not a charitable organization but one that profits from the misery of others.

Because when you have a high risk of collapse, you get a high interest rate. It’s called the ‘risk premium.’

A weak currency may offer benefits if you’re running a tourist resort or an export industry, but it offers none if you’re running a global hegemony. What it did accomplish was to move the seat of that evil hegemony from London to Washington.

How exactly did it do that? I think you’re way overestimating how important the exchange rate for your currency to other’s is.

Why not? Don’t we have a special relationship? Or are the nay-sayers over here correct that it’s a special relationship of lapdog and master?

The special relationship got you lend-lease in the first place and a loan so generous it might as well have been a gift. Sure, Britain could have benefited from more time- but the deal that resulted was unreasonably generous.

 

[tjm190]

In 1940, an agreement with the U.S.A. pegged the pound to the U.S. dollar at a rate of £1 = $4.03. This rate was maintained through the Second World War and became part of the Bretton Woods system which governed post-war exchange rates. Under continuing economic pressure, and despite months of denials that it would do so, on 19 September 1949 the government devalued the pound by 30.5% to $2.80. The move prompted several other currencies to be devalued against the dollar.

In the mid-1960s, the pound came under renewed pressure since the exchange rate against the dollar was considered too high. In the summer of 1966, with the value of the pound falling in the currency markets, exchange controls were tightened by the Wilson government. Among the measures, tourists were banned from taking more than £50 out of the country, until the restriction was lifted in 1979. The pound was eventually devalued by 14.3% to $2.40 on 18 November 1967.

None of that means there was a decline in the standard of living. American made goods were more expensive, sure.

Lord Beswick, in a rather mealy mouthed speech not atypical of the UK parliament and Lords, conceeds that the run on the pound “is linked” to the decision to devalue the pound.

“It may be asked whether this decision to devalue was precipitated by the run on the pound on Friday, the 17th. The answer is, No. The Government’s decision was based on the actual and prospective balance-of-payments situation and not on movements of short-term capital. Of course the two are linked, and confidence in the markets was affected by the underlying weakness in the balance of payments. But our decision was effectively taken before the happenings in the markets during the few days before Saturday, the 18th.”

Meaning that people believed Britain’s economy lacked the power to command a value that high on the international marker (aka people didn’t feel like they’d need that many pounds in the foreseeable future) so there was a sell off prior to an expected devaluation.

The research I’ve done would seem to indicate that lack of economic competence in the USA set in motion the run on the pound, the subsequent run on gold in Europe and the inflated value of the dollar which was as a result floated against other currencies… I must confess that this is an explanation I had not considered.

nationalarchives.gov.uk/cabinetpapers/themes/bretton-woods-system.htm

Bretton Woods was stupid- but the only way to create a run on the pound would be to convince people the pound was overvalued, which I believe at that point in history was true.

 

[Moonstruck888]

None of that means there was a decline in the standard of living. American made goods were more expensive, sure.

Goods like oil and gold, which had to be traded for in dollars, effectively making the USA the World Banker and freezing all the dollars in Europe?

It’s common knowledge that there was a decline in living standards in the UK going into the 70’s through to the 90’s… You don’t need me to spoon feed you through that…

Meaning that people believed Britain’s economy lacked the power to command a value that high on the international marker (aka people didn’t feel like they’d need that many pounds in the foreseeable future) so there was a sell off prior to an expected devaluation.

Correct. Now, as the USA is currently finding out having to beg the Chinese not to diversify from US Federal bonds, that is no way to run a global empire.

Bretton Woods was stupid- but the only way to create a run on the pound would be to convince people the pound was overvalued, which I believe at that point in history was true.

Correct again, but is it really a way to treat your special friend?

 

[tjm190]

Goods like oil and gold, which had to be traded for in dollars, effectively making the USA the World Banker and freezing all the dollars in Europe?

And yet GDP managed to keep rising, and inflation was managed. Those are the two key things that determine standard of living.

It’s common knowledge that there was a decline in living standards in the UK going into the 70’s through to the 90’s… You don’t need me to spoon feed you through that…

There was a recession in the early 70’s yes, but I think it’s fair to pin that on other factors/.

Correct. Now, as the USA is currently finding out having to beg the Chinese not to diversify from US Federal bonds, that is no way to run a global empire.

The Chinese are only one of the US’s sources of capital in-flow. At this point, China is nearly as dependent on our success as we are.

Correct again, but is it really a way to treat your special friend?

The US doesn’t ‘choose’ what the pound is worth.

 

[Moonstruck888]

And yet GDP managed to keep rising, and inflation was managed. Those are the two key things that determine standard of living.

Not the only things. The UK had serious problems balancing GDP with outgoing expenses in the 70’s and 80’s. We had huge deficits. We were spending more money on debt maintenance than just about any other factor by the end of the 70’s…

There was a recession in the early 70’s yes, but I think it’s fair to pin that on other factors/.

I’m sure you do.

The Chinese are only one of the US’s sources of capital in-flow. At this point, China is nearly as dependent on our success as we are.

Which is why your Government are very relucant to see them diversify.

The US doesn’t ‘choose’ what the pound is worth.

It does if the pound is linked to the dollar as it was in the 1960’s with the US as World banker…

 

[tjm190]

Not the only things. The UK had serious problems balancing GDP with outgoing expenses in the 70’s and 80’s. We had huge deficits. We were spending more money on debt maintenance than just about any other factor by the end of the 70’s…

Not a unique problem.

I’m sure you do.

Like, ya know, an oil shortage.

Which is why your Government are very relucant to see them diversify.

As are they- a bad dollar hurts them more so then us.

It does if the pound is linked to the dollar as it was in the 1960’s with the US as World banker…

No… the pound’s value is decided by market forces, which take in this case follow the number of people who want less pounds and those who want more.

 

[Moonstruck888]

Like, ya know, an oil shortage.

ROTFL!!!

The North Sea Reserves had just been discovered at the time. If anything an oil shortage would have put us in a very enviable position.

As are they- a bad dollar hurts them more so then us.

Only if they don’t diversify. Sooner or later they will, when it is to their advantage. In the USA, you can’t rely on China to owe you a living. It surely hasn’t been lost on you, the parallels between the US reliance on China and what we’re arguing about right now. You may well be having the same argument with some jingoistic Chinese nationalist in 20 years that I am having with you now.

No… the pound’s value is decided by market forces, which take in this case follow the number of people who want less pounds and those who want more.

So you are now denying that the value of the pound was pegged to that of the dollar?

 

[Moonstruck888]

Not a unique problem.

Not one that our “special” friend was very helpful with…

 

[tjm190]

ROTFL!!!

The North Sea Reserves had just been discovered at the time. If anything an oil shortage would have put us in a very enviable position.

… the 1973 oil crisis ring a bell?

Only if they don’t diversify. Sooner or later they will, when it is to their advantage. In the USA, you can’t rely on China to owe you a living. It surely hasn’t been lost on you, the parallels between the US reliance on China and what we’re arguing about right now. You may well be having the same argument with some jingoistic Chinese nationalist in 20 years that I am having with you now.

Okay- we buy lots of stuff from China. That means we exchange dollars for yuans. So people who once had yuans end up with dollars. And they say to themselves “Hey, now I’ve got dollars… what do I do with these?” Well, they can buy American goods (which means we even up the balance of trade) or they can invest those dollars in companies or governments. As long as we keep buying their stuff, they’ll keep sending those dollars back.

So you are now denying that the value of the pound was pegged to that of the dollar?

Hmmm? I’m saying that the relative value of the dollar and the pound was determined by the market forces.

 

[tjm190]

Not one that our “special” friend was very helpful with…

Right. We exist to serve Britain- we were plenty helpful with our decision to give half a century to repay a loan that was given over the course of less then a decade, a very low interest rate, and the decision to instate lend-lease to begin with.

 

[Moonstruck888]

Okay- we buy lots of stuff from China. That means we exchange dollars for yuans. So people who once had yuans end up with dollars. And they say to themselves “Hey, now I’ve got dollars… what do I do with these?” Well, they can buy American goods (which means we even up the balance of trade) or they can invest those dollars in companies or governments. As long as we keep buying their stuff, they’ll keep sending those dollars back.

Yeah, and for every one they send back they’ll keep five. The growth rate in China has been phenomenal over the last twenty years. No serious economists are in any doubt that China is going to be the next superpower.

In the 19th and early 20th century, the UK was the superpower because of the indusrial revolution.

After WWII, the USA was the superpower because of the creation of the Military Industrial Complex.

In the 21st Century, China is going to be the superpower because we’ve exported all our manufacturing industries out there.

That’s what makes superpowers. Manufacturing. Manufacturing generates money.

Hmmm? I’m saying that the relative value of the dollar and the pound was determined by the market forces.

Wich is another word for unregulated capitalism, which will be the Western World’s undoing. Greed will see to it that investors in the West give away all our power to China.

 

[Moonstruck888]

Right. We exist to serve Britain- we were plenty helpful with our decision to give half a century to repay a loan that was given over the course of less then a decade, a very low interest rate, and the decision to instate lend-lease to begin with.

The decision to instate lend-lease was not charitable. It was good business for the US, essentially a loan sharking arrangement.

If I had been the prime minister of this country in the 1950’s, we would have defaulted on the payments like the rest of Europe did. It was a big mistake on our parts to honour such a one sided agreement.

 

[tjm190]

Yeah, and for every one they send back they’ll keep five. The growth rate in China has been phenomenal over the last twenty years. No serious economists are in any doubt that China is going to be the next superpower.

In the 19th and early 20th century, the UK was the superpower because of the indusrial revolution.

After WWII, the USA was the superpower because of the creation of the Military Industrial Complex.

In the 21st Century, China is going to be the superpower because we’ve exported all our manufacturing industries out there.

That’s what makes superpowers. Manufacturing. Manufacturing generates money.

“keep 5?” Ya, they have foreign currency reserves. But when they actually want to spend those dollars they HAVE to spend them in America, either by buying goods or investing.

Wich is another word for unregulated capitalism, which will be the Western World’s undoing. Greed will see to it that investors in the West give away all our power to China.

So the fact that we let the market find the value of currencies, based on how valuable those currencies seem is going to be our undoing?

 

[tjm190]

The decision to instate lend-lease was not charitable. It was good business for the US, essentially a loan sharking arrangement.

If I had been the prime minister of this country in the 1950’s, we would have defaulted on the payments like the rest of Europe did. It was a big mistake on our parts to honour such a one sided agreement.

Right. You got equipment you couldn’t pay for at the time to keep your country alive, an extremely long time to pay it back, and an incredibly low interest rate- but ya, let’s say that the whole arrangement only benefited America.

 

[Moonstruck888]

“keep 5?” Ya, they have foreign currency reserves. But when they actually want to spend those dollars they HAVE to spend them in America, either by buying goods or investing.

Why do they have to spend them in America? They can exchange them anywhere they please.

So the fact that we let the market find the value of currencies, based on how valuable those currencies seem is going to be our undoing?

If you do not protect US industry, you will lose it, forever, and your currency will plummet along with it. I’m old enough to remember that happening here.

 

[Moonstruck888]

Right. You got equipment you couldn’t pay for at the time to keep your country alive, an extremely long time to pay it back, and an incredibly low interest rate- but ya, let’s say that the whole arrangement only benefited America.

America was nothing before 1939, a glorified cattle market. By the end of the 1940’s it was the world superpower. Do you think it got that way as a fortuitous by product of helping others out of sheer nobility?

 

[tjm190]

Why do they have to spend them in America? They can exchange them anywhere they please.

Europeans want Euros. Koreans want Wons. Brits wan Pounds. They can exchange their dollars for Euros, Wons, or Pounds, but that only delays the process. Eventually, those dollars will find their way to America.

If you do not protect US industry, you will lose it, forever, and your currency will plummet along with it. I’m old enough to remember that happening here.

Protecting industry is not the same as protecting currency- the only real way to protect the value of your currency is by declaring a fixed exchange rate, in which case you are still at the mercy of the market.

 

[Moonstruck888]

Protecting industry is not the same as protecting currency- the only real way to protect the value of your currency is by declaring a fixed exchange rate, in which case you are still at the mercy of the market.

I never said it was the same.