Exorbitant privilege spawns a global "consumer class". Exchange rate opportunities send production to relative low wage countries. Wages and opportunities for the consumer class dwindle as their economy is drained of equity. Producer economies see substantial wage growth. The world transitions to new systems, new consumers and a need for new "relative low wage" producers.
When the American people are truly ready, they can again be the world class super producers of the WWII economy, without WWIII. But their "relative production cost" (including labor cost) must be weak in oil and gold. That is to say, as priced in real world necessities, not paper.
... all economies today are truly equal in production as the exchange rates are the manufactures of profit!"Where productivity is relatively equal, labor arbitrage is the profit opportunity, and exchange rates "manufacture" that profit.This is true of course if and when the currencies are "still working."
As the currencies stop working ("as they always used to" - a relative term) it will become more and more meaningless to compare them to one another, or to real things. Then we will compare real things like "relative production cost" to real things like wheat, gold, pork bellies and oil, and these calculations will then re-inform us of a national currency value.
The point being ... the 8 key factors which most impact exchange rates today have little to do with available resources and comparative production costs. These will be key factors tomorrow. What is this country's available energy, wealth and food resources and their capacity to maintain flow of same? The military is a factor here.
The American economy is ripe for change. The companies, and the workers have no interest in gold, and the factories can run on cheap shale oil (compared to what will be expensive foreign oil). The question is, will the American work at all? And if he doesn't, what will his dollar debt be worth?
In the end, if a Malaysian will work hard all day for six meals and a roof over his head for 2 nights, but an American will only work half an hour for the same things, how can the American currency unit be worth so much more? We don't ask that question today. But tomorrow - other factors be damned - we will.
We are lucky, some of us, to escape the real world for almost an entire lifetime. Once in a lifetime, to reprice this world and reset reality, is enough.