That is a argumentation that I recognize from Paul Craig Roberts’ endless rantings against outsourcing, where he first complains that the foreign labor is just too cheap and then worries that the trade deficit will create a weak dollar which will make the foreign labor not so cheap any more. One would think that if the thing he complained about disappeared it would mean that
the problem will be solved, but this little contradiction doesn’t seem to bother him.

Yes , I’m confused too. What about the fact that all oil prices are stated in US currency? Is there some kind of obligation here? Or could we just all say “oil for food” for instance?

There was some historical correlation I think with the oil future exchange created in London, wasnt’it?

Another thing: recently I read a Reuters newsfeed that said something like: 70% of the world’s oil ressources belong to different States (as opposed to private hand). So it’s statists that decide those prices?

I agree with the article but think protectionist policies are growing in appeal. And while it is fun to make fun of the stupid policies there is a problem.

For example, there is a large and growing stock of dollars held by foreign governments. China, for example, is or soon will be the largest foreign creditor. At some future time, these dollars will buy US goods and services. Any imbalance in currency must correct at some point. It could be that Chinese consumers develop a huge thirst for things US but these dollars are in Chinese government accounts not private accounts.

Current US consumers are better off but future consumers may/will be hurt badly.

Import quotes, tariffs, etc. distort the market as is pointed out in the article. However, this large stock of foreign buying power is a distortion of the current market and the future market. We do not have a market price that clears the market but a price that accumulates dollars in foreign control. We could argue that this is just another example of government interference in the market, but that does not change the situation.

I believe in free trade but it does not seem to me that Chinese labor is free to bargain for better wages, etc. This will change over time but it is a slow process.

So when friends point out this growing stock of overseas dollars and say it is creating a huge problem for the future. And say, “We should slow/stop “cheap” imports and invest in higher priced domestic energy to avoid oil imports.” What is the answer? Sit tight because the problem will correct itself in time. No doubt true but there will be a lot of pain.

What can we do now to correct this imbalance? Especially since many are calling for protectionist policy’s. And when the pain comes the government will do some dumb short sighted things.

Or perhaps the real question is given the pain is on the way how can I avoid it?