The other day I was playing with my time machine and came across an essay by a highly respected historian, written in 2020, in which she summarized the economic developments in the United States in the final years of the preceding decade (that is, between 2006 and 2010). By allowing the price of oil to skyrocket and doing extremely little to curb its import—by paying through the nose for millions of barrels of foreign oil—the United States transferred huge amounts of its wealth to its adversaries. Among the top beneficiaries were Iran, Russia, Venezuela and an assortment of authoritarian countries from Saudi Arabia to Kazakhstan.
As of the end of 2008, the historian noted, payment for oil was no longer accepted in U.S. dollars (because of its sharply declining value) but mainly in gold bars. The amounts of gold the US had to pay foreigners were so huge that several ports were clogged as ship after ship lined up to pick up the payments. These ships competed for loading space with other ships that loaded American goods, which had become so cheap (for those overseas paid with their rising currencies) that buyers from overseas emptied American stores.
Americans initially saw a lot of good in the rising demand for their goods, as it created jobs. Only later they noted that because American goods fetched ever less, workers wages and benefits had to be cut time and again. Americans, they found, had to work ever more—for ever less.
Americans also were fooled by the stock market, which instead of collapsing, held on. Only later did they note that it managed to do so mainly because foreigners used some of the trillions of dollars Americans were paying them for oil and other raw materials to buy American stocks; that is, they began to own American companies. Americans, the historian noted, were concerned a bit about the security implications of foreigners owning ever more American companies, but paid next to no mind to the economic implications. Increasing foreign ownership meant that an ever larger share of the profits the American companies did generate was paid to the foreigners who now owned the companies. Foreign owners collected the dividends; they clipped the coupons on American shares. As long as foreigners continued to ship to the United States their precious oil, it seemed that no one noted that, in effect, Americans were paying them to buy an ever growing share of American assets.
The historian speculated on what caused the American blindness to their rapidly deteriorating condition. She found that many factors were at work, each reinforcing the other. Capitalist ideology claimed that any interference with trade across international borders is a grave sin. Americans had a hard time breaking their romance with their cars. None of their elected officials dared tell them that a major tax on imported oil was the only way to stop the greatest wealth transfer in human history, from the United States to a score of other nations. Foreigners financed American deficits for so long—allowing Americans to maintain a standard of living much higher than they were able to pay for by their labor—that Americans were conditioned to assume that they will never have to pay the piper. Hence, they faced a particularly rude and contentious awaking toward the end of decade, when the dollar turned into a junk currency, and Americans had to work overtime just to pay for the trip home from work. Their main outcry was: Why didn’t someone tell us?
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