People should remember that in aggregate, the budget deficit – the current account deficit = personal savings, and that price inflation results from net new money being created through budget deficits in excess of economic and population growth so that more money per capita is chasing the same amount of good per capita.

If we assume people want to save a fixed ratio amount of income every year, a rising demand for imports, in the case of the US in the late 1960′s/early 1970′s for exponentially more foreign oil, necessarily drives a higher budget deficit to accomodate the change, and the excesive budget deficit causes inflation which devalues the real value of the dollar. With a foreign trade system where the balance of payments was guaranteed in gold, which is limited in quantity, this situation was untenable, and exacerbated by the falling real value of the dollar. If you can take $35 and get $70 in gold, you obviously take the gold.

I wish others were as fortunate to find something they loved at which they could make a good living.

Nixon simply prevented the emptying of the American gold reserves by the French and Arabs.

The real transformational economic event of the 1970′s was the loss of American pricing power over oil and energy prices as swing oil supplier status changed from the Texas Railroad Commission to Saudi Aramco. However, events in the 1970-1973 period do not account for the disconnect in wages vs. productivity which occurred after 1981. Those things are much more clearly linked to our new tax code and new economic system brought in by Reagan.

They were never “free”. They are all part of your compensation.

They were free to me, and the cost to the company is obviously equal whether they pay them directly or pay them to me first unless the company deals unfairly by not compensating the employee for the higher costs being passed on. And as the costs (and risks) have been gradually shifted to me without compensation, my real income declines until I get actual raise. If I get a 3% annual cost of living adjustment, but half the bump every year is eaten up by higher health insurance copays, my standard of living decreases by the year and I have to cut back on consumption, even as I am supposedly becoming higher “paid”.

Look at a real example. Some time ago, I used to earn $31.76 per hour, had $308 in biweekly medical and retirement deductions, and paid $361 biweekly to FICA and local taxes, and over 4 years got 3% increases so that now I am earning $35.74 per hour. But at the same time, lets say the company asks for dramatically more in health insurance copays that it used to cover, so that I am now paying $453 in medical and retirement, and $405 in FICA and local taxes. Although my biweekly pay is theoretically up $320, $190 of that has been swallowed by increased benefit costs and resulting higher taxes on higher pay. My real net pay has gone up 5%, but the general cost of living is up 12.5% meaning I am worse off. The company has saved money and increased its profits by jamming what were its previous overhead costs down on me and making me cover it by cost of living adjustments, because they were billing me out under contracts that covered my pay times the overhead + 10% profit and accounting for 3% annual pay increases.

The real reason for offshoring is that modern management is amoral and lacks any sense of community with its workers or the places in which it operates, and sees no guiding value in operating an enterprise beyond putting a few more dollars in its own pockets through maximal extraction of operating income. Modern management is also unthinking, and prone to fads put out by the ivory tower crowd in business schools. If bringing in 100 illegal Mexicans or shipping a factory to some third world despotate results in a 5% bump in profit from slightly lower operating costs, the company does it and the previous American workers are let go without a heartbeat of hesitation as to their interests or future welfare.

We have lost sight of the economy being for the purpose of serving humanity and human need and have changed it instead to serve the purpose of simply piling up wealth without reason or purpose.

That conservatives should end up on the wrong end of this proposition shows how far so-called conservatives of today have strayed from their intellectual moorings 225 years ago.

The answer lies in economics. The Fed started inflating during the LBJ administration to pay for Viet Nam and Nixon closed the gold window in ’71. Massive inflation has ensued. The rich benefit from inflation — the middle class, not so much.