We Won The Battle...And The War

The US dollar is getting a lot of press lately, but when you see Maria Bartiromo on the Today show talking about her bar bill, it has really pushed into the mainstream (By the way, it was a incomplete example. Her EUR 70 bill for two drinks in a hotel bar is high, but without equating it into a US dollar equivalent, it is just a EUR 70 bill). Today's hot topic is the parity level of the US and Canadian dollars. Yes, it has been 30 years since that has occurred. What is forgotten is that prior to that time, the Canadian dollar traded at a premium to the US dollar. I'm a very big believer that market forces should set currency levels based on purchasing power parity. When central banks and governments get involved, market players get involved to capitalize on those actions. George Soros and the Bank of England and the breaking of the ERM come to mind.

That brings me to the title of this post. We won the war. With the exception of Venezuela and North Korea, capitalism rules the roost. No need to look any further than Russia or China to see that. The consequence of winning is this war is a more competitive global environment. The US and its currency at at a crossroads. We can either continue down the current path and live with the consequences or change. There is no one option for change, but they must all start with putting domestic US interests first. This isn't meant to be xenophobic. On the contrary, the US should engage our friends and enemies more energetically. The phrase "Freedom isn't free" doesn't apply in most places in this world. The US taxpayer pays for it and the US military enforces it. Since there is very little chance of cutting entitlement spending (let's hope there can be a lid on future entitlements), the only other viable option is to reduce the defense budget. The billions around the world that have benefited now need to foot the bill, in more ways than one. The US could then balance the budget and couple that with a realistic domestic energy policy, one that isn't dependent on the whims of unstable regimes, and the dollar will take care of itself. The US is still the most dynamic country in the world, but it is time to put aside our differences on the critical issues and focus on the task at hand.