"Do not wear yourself out to get rich; have the wisdom to show restraint. Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle." Proverbs 23:4-5

The gratification of wealth is not found in mere possession or in lavish expenditure, but in its wise application." Miguel de Cervantes Saavedra

I recently received an email from my sister that included the quote below from by Thomas Friedman's book Hot, Flat, and Crowded. While reading over this quote a light bulb came on. If you substitute “fiat dollars” or to prevent repeating myself just “dollars” in place of natural resources or oil you come to realize that the US has one of the rarest forms of Dutch disease. Go ahead try it.

Quote:
"...professional economists have long pointed out that an abundance of natural resources can be bad for a country's economy and politics.  This
phenomenon has been variously diagnosed as "Dutch disease" or the "resource curse".  Dutch disease refers to the process of deindustrialization that can come about as a result of a natural resource windfall.  The term was coined in the Netherlands in the early 1960s, after the Dutch discovered huge deposits of natural gas in the North Sea.  What happens in a country with Dutch disease is this:  First the value of the currency rises, thanks to the sudden influx of cash from oil, gold, gas, diamonds or some other natural resource discovery.  The strong currency in effect raises the price of the nation's goods to foreign buyers, making the country's manufactured exports very noncompetitive and imports very cheap for its citizens.  The citizens, flush with cash, start buying cheaper imported goods without restraint; the domestic manufacturing sector gets wiped out; and, presto, you have deindustrialization."Also, take the oil rich countries for instance.  They have a dependence on natural resources that skews the country's political, investment, and education priorities, so that everything revolves around who controls those resources and who gets how much money from them.  There is a distorted view of what development is all about. They are not thinking of building a better society brick by brick, or the foundations of better education, rule of law, innovation and entrepreneurship.

Here is my break down of the quote…

"...professional economists have long pointed out that an abundance of natural resources can be bad for a country's economy and politics.”

 Now our vast natural resource is the Fed's ability and willingness to print money out of thin air, with nothing to back it up. If you can do that who needs natural resources?

"...The citizens, flush
with cash, start buying cheaper imported goods without restraint; the domestic manufacturing sector gets wiped out;

 American companies have turned into “global companies” and moved plants and factories to Mexico, Asia, China and India, and we are buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers) and, presto, you have deindustrialization."

"...Also, take the oil rich countries for instance.  They have a dependence on natural resources that skews the country's political, investment, and education priorities, so that
everything revolves around who controls those resources and who gets how much money from them."

And who controls the printing press from where our "natural resources" come?  To quote Pat Buchanan:

"An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators. What the Greatest Generation handed down to us—the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved—the baby boomers, oblivious and self-indulgent to the end, have frittered away."

Could the cure perhaps be to stop the presses? Or better yet get rid of the Federal Reserve altogether and return to the gold standard. This could not be done over night but I know just the doctor to oversee the treatment.

We have Dutch Disease. Lets hope it's not terminal.