Wednesday, March 26, 2008


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Dear Friends:

History, like a poorly-prepared meal, tends to repeat itself. The only non-technological factors within the context of history that change are 1) the length of the socioeconomic cycle, and 2) the amplitude (e.g., the magnitude) of the highs and the lows. I have heard no end of metaphors for history... a sine wave; a pendulum; a coiled spring... just to name several.

This systematic repetition will likely be the case until such time as the deeply ingrained nature of the Human psyche actually evolves.

We tend, as a group, to have a short span of memory, a limited temporal focus, and an "all or nothing" response pattern to things happening around us. We have lived through numerous holocausts, bouts of xenophobia, periods of induced paranoia, civil wars that turn into protracted zero-sum games, lies (and careers) that have come unravelled, and economic depressions. We have a foolish proclivity to think that whatever social or economic circumstances we find ourselves in have never occurred before.

Our persistent failure to analogize (have I invented a word?) keeps us running into to same tree, over and over again. Nobody ever moves the tree -- we just keep forgetting that it's there.

Before I continue this post, I bring you a timely advertisement from Ex-Im Bank regarding an upcoming International Trade Conference in California. After this brief commercial, we can discuss the Future.


"This conference will bring together small to mid-sized enterprises and trade promotion service organizations in both the public and private sectors with experts from across the state to dialog on the current issues, challenges and opportunities facing California's global trade and investment community. This year's conference will feature panels and presentations on using web based solutions for qualified information, marketing, trade finance, interpretation/translation, collaboration and security.
AgendaOnline RegistrationMail-in RegistrationSponsors-ExhibitorsConference History
Event Info
April 25, 20088:00a.m.-4:00 p.m.California Chamber of Commerce1215 K STREET, 14TH FLOOR (At the corner of 13th and K Street ESQUIRE BUILDING)SACRAMENTO, CA 95814

More Info
Monterey Bay International Trade Association (MBITA)P.O. Box 523Santa Cruz, CA 95061 Tel. 831-335-4780Fax 831-335-4822


It is a comfort to know that Ex-Im is still in the business of fostering and assisting in solidifying trade opportunities for the benefit of U.S. exporters, for the Balance Of Payments, for the Balance Of Trade and for other things patriotic and fiscally salubrious.

The sad irony is that the U.S. does not have many things that it can export. Most every manufactured item is outsourced to enterprises in foreign nations. Most U.S. consumers purchase durable goods that were either imported, produced by multinationals, or which are merely packaged in the United States, but with the bulk of the value being added overseas.

The U.S. has several things that it can and does export:
  • Jobs and employment opportunities;
  • Dollars (in the purchase of goods and services provided by other countries);
  • Agricultural commodities;
  • Weaponry;
  • Natural resources (metals, minerals, and mined commodities).

Let's take a quick look at each of these, and the associated benefits and costs:


Domestic companies can increase their profit margins in the shorter-term by outsourcing and offshoring. But the aggregate costs include rising permanent unemployment; loss of the value-added components of profits, and increased dependence upon foreign labor. The longer-run costs include the loss of management skills and the exodus or loss of technical talent; the loss of entire businesses and industries; the loss of income and wealth to the extent that we become weaker consumers, as well as weakened producers...


The U.S. spends dollars on foreign goods and labor...they seem less expensive. But in the longer-run, this causes a devaluation of the dollar, and an exodus of dollar-denominated wealth from the United States. In addition, a great deal of the instruments representing the National Debt are in the hands of non-U.S. holders. As the U.S. borrows increasing sums from outside of its own citizenry and domestic institutions, the U.S. becomes enslaved by its indebtedness owed to parties offshore, and becomes perceived as a poorer international credit risk; this further devalues the U.S. dollar, and all instruments denominated in U.S. dollars. This effect is rapidly being heightened by the rise in the value of the Euro versus the U.S. dollar. The U.S.' most fundamental weakness -- we are utterly dependent on OPEC nations to give us the bulk of our fuel. As oil prices rise (as of the day of this writing oil was selling at an average of $105.32 per barrel!), the U.S. dollar declines, as well as virtually all of the other indices of prosperity.

Nightmare: The OPEC nations (and other nations in the course of ordinary commerce) insist on payment in Euros instead of U.S. dollars for virtually everything that they supply. Dollars become useless scrip. The wealth of a nation is wiped out immediately. The U.S. is vulnerable, and doesn't hold much leverage (as a non-supplier of too many things made and obtainable elsewhere) except in terms of its formidable military. But a military needs funds to pay for manpower and materiel. A trained mercenary goes to the highest bidder. What's a soldier to do when patriotism does not pay his/her family's living expenses?


The U.S. is blessed with fertile soil and sophisticated agricultural technologies. It is one of the few arrows left in the national quiver. The U.S. has the capacity to feed many of the world's hungry. It is also unlikely that we'll experience any serious blowback from this: if I were a betting type of fellow, I would bet that there are very few emerging nations who are turning our carrots into dangerous projectiles, or weaponizing wheat for the launch of a stealthy moonlight Triscuit attack on the United States, its territories or possessions. I am only slightly concerned about brussells sprouts being used as warheads aimed toward key cities and national monuments.


Someone famous once said "If you give a person power, he will be compelled to use it." I tend to agree. The reality of U.S. troops being killed by U.S.-made weapons has already arrived. This blowback continues, and dates back to the arming, by the United States, of Afghanistan in the latter's conflict with the former Soviet Union. Combine this with the problem that much U.S. weapons production and actual soldiering has been, well, outsourced. Hmmm. Human nature, as evidenced by history, would indicate that weapons will invariably be turned on the seller. This is only a matter of who, when and to what extent.

There is also that quirky aspect of Humanity that somehow compels friends of convenience (individuals, as well as nations) to become enemies.


The United States is rich in metals and minerals. These metals and minerals, mostly considered industrial or "non-precious" are becoming increasingly important. Thorium will likely come into common use as a fuel for atomic reactors as many non oil-producing nations accept a safer variation on atomic power theme. And the United States has quite a bit of thorium, as well as Rare Earth Elements (reference, THORIUM ENERGY, INC., which can be located at: ), which are absolutely essential to virtually all modern technology, and which are continually finding increased applicability. Thinking about it, having valuable natural resources and reserves in the U.S., coupled with a steadily-increasing demand for the these materials in all of the technology-producing nations should give the U.S. a big stick with which to negotiate. Right? Maybe not.

With a declining dollar and little else to sell to other nations, the United States' exporting of these increasing precious non-precious resources and reserves is similar to tearing down the walls of your home and throwing them into the fireplace to heat the living room. This is the economic version of a Black Hole.

Yes, there will be a radical shift in the world's balance of power, and it has already begun, with momentum increasing daily. But the media and other forces within the United States are trying to defer admitting the inevitable.

The United States should be careful that it doesn't sell itself completely into slavery.


Douglas Castle

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