Reply #79: A rapidly devaluing dollar...

[davekriss]

...would result in the same thing we saw after James Baker engineered the Plaza Accord in 1985 -- a massive firesale of American assets, everything from buildings to companies. In 1985, at the time of the Plaza Accord, we owned 3.7x more of the rest of the world than the world owned of us; by the end of the GHWB administration in 1992, the rest of the world owned 0.4x more of us than we of them. That's quite a sea change, quite an abdication of sizeable slice of self-control. Bad as that was, hang on to your hates, as GWB is basically Reagan+GHWB squared when it comes to fiscal irresponsibiliity. Just make sure you have a sturdy wheelbarrow when you go to buy bread.

In essence, our over-indebtedness and a loss of dollar hegemony (petrodollar/reserve status) would see a collapse in consumption (read>depression) and a loss of a high degree of soveriegnty. If half the manufacturing plant, plus a third of the services sector, etc., are foreign owned, our future local representatives will have to take the interests of these foreign owners into account when making law, otherwise they could pull up their tent pegs and go home, leaving us in severe straights.