Helvidius
Well-known member
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- Jul 18, 2010
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Bernanke defends new Fed plan to boost economy - Yahoo! News
German Finance Minister Attacks Fed Move Again : Report - ABC News
What will this do to the U.S. economy? Will it cause inflation or stagflation? If so, what is the best way to prepare for it?
Interesting article today in Barrons. They talk about the Chinese government investing more in hard assets and less in U.S. government securities. As their economy moves to more of a supporting internal demand versus exports to America, they can stop propping up our economy by buying our government debt. As China and the other countries see the Fed moving to devalue the U.S. dollar it would be foolish to think that they will continue to absorb loses on their treasury investments. So it seems there is a race in this devaluation game. Can we crater the dollar before the Asian countries that hold trillins of dollars of government debt pull out.
Who can seriously say this is an action of the world's superpower.
The Chinese have been investing in hard assets for the last few years, they knew this was coming, just not exactly when
As for being the action of the worlds superpower, Britain did the equivalent of it a couple of times during its prime time, the US did the equivalent in the early 70s when Nixon took the US off the gold standard.
Not sure your point. Is it that Britain is still a world superpower?? The U.S. was not the largest debtor nation in the world in the 70's.
As to the Chinese, while they have been investing in hard assets in previous years, those investments were still materially smaller than their investments in U.S. debt. Unless the Arab oil producers and Asian exporters buy our debt the Fed will have to be the buyer of last resort of our trillion dollar deficits.
You are wrong to equate the financial position of the U.S. today and 40 years ago. When you look at the debt to GDP ratio back then we had a relatively clean balance sheet.
China still has a around 800 billion in US agency debt, they just have not been increasing it much over the last few years, but this is something the chinese government has been concerned about for at least 4 years.
The US in the 70s was still a creditor nation, during the Reagan admiin it became the worlds largest debtor nation.
And yes in the 70s the debt to GDP was far better then it is now or was in the 80s.
The point is yes a superpower can do the above actions and still remain a superpower, the UK remained one for decades after it started to fail economically, the US will remain a superpower albit a diminished one after this crisis is over
Well call it what you will. I do not know many who considered Britain a superpower after WWII. The U.S. due to it's military superiority will remain a superpower of sorts for some time as well. But unless they are willing to have wars all over the world they will be materially less able to impose their will.
The Chinese have dome a good job of feeding the U.S. beast as they needed it to export their growing manufacturing base. As they come to rely more on domestic comsumption and that of other Asian nations the U.S. market will come to be of less importance. Even the fact that they are investing less is hurting the U.S. economy currently.
Do you really believe that the Fed can keep this ponzi scheme of monetarizing the federal deficit for decades? What exactly would be the meaning of the value of the dollar if we print an additional trillion dollars of paper with numbers on it.
As for Britain I was thinking more along the lines of pre WW2 not post.
As for the US
It still will have the most powerful military, by a long shot, the largest economy for at least 15 years, a GDP per capita a few multiples that of the China (I am using China as it would be the only country to form the largest economy other then the US. Meaning no matter what the US will still be the most power nation on earth. It will not have the same level of dominance that it has had over the last 15 years of course.\
No the fed can not keep the ponzi scheme operating for too long. Never stated it could. What will happen of course (best case in my opinion) the standard of living for the majority of americans drops by about 15-20% within 10 years, and most likely within 5-7. The dollar will be replaced as the world reserve currency by something issued from the IMF (not enough gold to allow it to become the worlds reserve currency)
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