The Unwritten Plan

There’s a number I’d like you to keep in mind. That number is 77 and it’s important for a reason.

Take all the factories in America that make something… anything for that matter. Put them all together and you’ll find that, as a group, they are working at only 77% of their capacity.

We can look at it another way too-one quarter of all the space and equipment in a typical American manufacturing facility sits idle without any use. Our factories are working at only three- quarters of their capacity.

Why are our factories far from working at full capacity? A simple one-word answer: China. Much of what American consumers buy, much of what the one hundred million people who visit Wal-Mart each week buy, are goods made in China. It’s simply cheaper to have goods imported from China than to have those same goods made here because Chinese labor is so inexpensive.

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But it’s not just goods anymore that are made and imported into the U.S. Many large American companies have set-up their call centers and other “service” operations in cheap-labor countries. American companies, in their never-ending pursuit of profits, are ultimately responsible to their shareholders. So if they can get cheaper labor elsewhere, outside America, well that’s exactly what they’ll do.

However, times are slowly changing. Manufacturers around the globe, and many foreign central banks, are getting close to crying bloody murder. And that’s because the U.S. dollar has literally been in a freefall against other world currencies.

The ultimate, unwritten, not talked about plan: Devalue the American dollar so low that Americans will find it cheaper to buy American again than import… Increase the capacity of our factories at the cost of decreasing the capacity of foreign manufacturing plants… Bring our dollar so low foreigners cannot afford to sell their American stocks and real estate because they would take too much of a currency hit… Yes, make our real estate and stocks even cheaper and more attractive to foreign investors because foreign money will go so much further in the U.S.

I truly believe this is what is going on right now with the American dollar. It’s not good for Americans who want to travel abroad, but it is good for the American tourism industry because foreigners can now travel in the U.S. at bargain basement prices (because of the U.S. dollar is valued so low).

The decline in the dollar has been gradual to date. And that’s a great thing. If we can continue on this “plan,” we can truly engineer a turnaround. And really, I think it’s the only good plan we have going right now.