Yep, it won't be long before the Japanese own the US.

tooshy said:kamalktk said:TexAsh said:WalStMonky said:kamalktk said:Remember when the dollar "collapsed" versus the last "new dominant" currency? It was 94-95, and the dollar collapsed over a few months from 105 yen to 80 yen. The world collapsed and every American was forced to live in tent cities and refugee camps for a few years.

It was horrid, horrid I say. Some were forced to consume their young to stay alive, those of us who were more fortunate had to cook over greasy fires in 55 gallon drums...those who forget the past are doomed to repeat it!

So much for a serious discussion I can see the thread being hijacked...
I made a serious and sarcastic reply. I was living in Singapore during 94-95 and was on the "winning" side of exchange rates as the Sing $ strengthened versus the US $. I also was living in South Korea duing the Asian financial crisis of 1997 when the won lost half it's value versus the dollar. So I've seen both sides firsthand. Despite much public gnashing of teeth by the media/politicians, life went on pretty much normally.Several things have changed since 94 and 97...I don't think US can control things as well as Greenspan orchestrated with the IMF. That's just my gut feeling. In 94 and 97 we were in our peak expansion years, where are we today? In 94 and 97 emerging markets were just that, today they are a threat to global inflation and our deficits.

Every shock was "cured" with a sudden boost of liquidity...sure the Feds might try that again. But what's changed is the inflation factor...it's here to stay. What a difference one short year makes. Today I think every one sees China as a self sustained economy, furthermore, we have yet to see what the government does with it's reserves (other than financing US consumption).

Just to refresh our memories, emerging markets were a source of cheap labor that ensured low cost imports (low inflation). Can we say that's still true? Sure there is another country down the road who we can tap for cheap labor, but the supply/demand balance has shifted and there are more rising hungry consumers than cheap producers.

I'm a bit worried (nah) how we are going to finance our profligate lifestyle. I suppose we can always take the backseat and get a haircut.

good points, though I wouldn't quite say that China is self-sustained. I think it's still heavily export-driven and domestic demand is low.

The article raises some points that have not been addressed by anybody:
1. Why are the M3 figures suddenly no longer being published?
2. South Korea and some other Asian economies have started slowing down growth in their dollar stockpiles and instead diversifying into Euros. How will this impact the USD's status as global reserve currency? How will it impact the US economy?
3. China, Saudi Arabia and other dollar-hoarding countries are starting to use those dollars to buy US companies, instead of simply investing in US Govt. securities like they used to do earlier. They are going from mostly-"loaner" to more-and-more-"owner". How will this impact the US economy going forward?

Those who have been vigorously tearing TexAsh to pieces for trying to promote serious discussion about an unpopular and uneasy subject are invited to kindly shed some light on this troubling question and explain it away in a satisfactory manner.

Those who have been pointing out that US Debt is historically at the same levels as percentage of US GDP should note that historically there was no serious competitor to the US Dollar for the position of international reserve currency. Now there is the Euro. Things have changed. So being Number 30 on the list of public debt may not be good enough going forward. The USD has to compete with the Euro to win the confidence of the international finance community. Things are changing; so just keeping in step with historical levels is no guarantor of success going forward. So, the argument that "things are as bad as they historically were, so we'll continue to remain fine" has no merit.

Dismissing unpopular items such as this out of hand without due consideration is not going to help us compete and win the challenges of the future.

Anakin

MisterMe said:The difference now is that Bush and Congress has spent away our safety nets.I'm sorry, but this is just gibberish. What safety net are you talking about? And how is our spending removing this safety net? That just doesn't make any sense. If anything, it is our investment in growth (i.e. spending) that is building a safety net, not removing it.We as a country are levereged to the hilt.Not any more than we have been averaging for a century and a half, and we are leveraged a lot less than a bunch of other industrialized countries (refer to the link earlier in this thread).
In the nineties there were no other countries that could topple us economically now there is Europe and soon China and India.There weren't? Japan wasn't growing? Germany wasn't an economic powerhouse? Those are no different than the economic "threats" in China and India today.It's true China needs us to buy their goods but once their consumer base gets enough wealth they won't need us anymore to prop up their economy - then where will we be?We will be a in pretty good spot with the worlds largest economy being able to afford to buy more stuff from us, and from the rest of the global economy. A rising tide lifts all boats, you know.All we really own right now are the brand names - all the manufacturing is done in China. Already the Chinese are making their own brands of electronic equipment that are being made in the same factories as the world class American brands. What becomes of them when people find that they can buy the same exact product sans the brand name for 25% less. Anyone else notice the off brand HD tvs in BJs and Costco?You mean great "American" brands like Sony? Toshiba? Panasonic? Samsung? LG? JVC? Mitsubishi? Yamaha? Sharp? Oh wait....

National debt vs GDP graph

National debt clock and pie chart and corrected charts


Why do 2 parents have to work to support a family now - ?? and why is our standard of living dropping??
alternate cost of living article

OK, Many of you will just say - I am a fear munger or idiot - "sky is falling", I have studied economics every day for 3 years - I am seriously worried about USA future.

Romans ruled the world for 300-400 years and collapsed - partly through devaluation and lack of confidence in their currency.

quoted from - here

America has become more a debt 'junkie' - - than ever before
with total debt of $48 Trillion - - and the highest debt ratio in history.

That's $161,287 per man, woman and child - - or $645,148 per family of 4,
$45,514 more debt per family than last year.

Last year total debt increased $3.9 Trillion, 5 times more than GDP.
External debt owed foreign interests increased $1 Trillion;
Household, business and financial sector debt soared 9%.

72% ($35 trillion) of total debt was created since 1990,
a period primarily driven by debt instead of by productive activity.

And, the above does not include un-funded pensions and medical promises.

2 great questions:
Can the production of debt forever replace the production of goods and savings?
Can Americans forever borrow their way to prosperity?
Easy Answer > NO WAY !!

So it doesn't bother you that the Japanese were able to purchase Rockefeller Center, lock, stock and barrel?

anakinskywalker said: Those who have been vigorously tearing TexAsh to pieces for trying to promote serious discussion about an unpopular and uneasy subject are invited to kindly shed some light on this troubling question and explain it away in a satisfactory manner.
Anakin

Very few FW posters want to have a serious discussion about the US dollar's collapse. When it's brought up, the discussion is overwhelmed with "why do you hate America", and "you're a stupid doom and gloomer, or "the sky isn't falling, chicken little".

Anyone who is paying attention, knows that the stock market has fallen since 2003, once the dollar's decline is factored. Or that the housing market "bubble" was, in reality, a decline in prices, after the dollar's decline is factored. Yet, no one wants to know or see that. All they want to know is that they have more dollars now, than they did 5 years ago. Never mind that those dollars aren't worth as much.

It's like trying to explain inflation to Homer Simpson. He doesn't care, so it doesn't affect him.

WalStMonky said:So it doesn't bother you that the Japanese were able to purchase Rockefeller Center, lock, stock and barrel?

No.

What bothers me is that more people in the USA know what Paris Hilton is doing at this exact moment, than what is happening to the M3.

BurninUp said:National debt vs GDP graph

National debt clock and pie chart and corrected charts


Why do 2 parents have to work to support a family now - ?? and why is our standard of living dropping??
alternate cost of living article

OK, Many of you will just say - I am a fear munger or idiot - "sky is falling", I have studied economics every day for 3 years - I am seriously worried about USA future.

Romans ruled the world for 300-400 years and collapsed - partly through devaluation and lack of confidence in their currency.

quoted from - here

America has become more a debt 'junkie' - - than ever before
with total debt of $48 Trillion - - and the highest debt ratio in history.

That's $161,287 per man, woman and child - - or $645,148 per family of 4,
$45,514 more debt per family than last year.

Last year total debt increased $3.9 Trillion, 5 times more than GDP.
External debt owed foreign interests increased $1 Trillion;
Household, business and financial sector debt soared 9%.

72% ($35 trillion) of total debt was created since 1990,
a period primarily driven by debt instead of by productive activity.

And, the above does not include un-funded pensions and medical promises.

2 great questions:
Can the production of debt forever replace the production of goods and savings?
Can Americans forever borrow their way to prosperity?
Easy Answer > NO WAY !!

A less biased graph than what you'll get from "911review.org"
Debt as a percentage of GDP

What's with all these crazy hock stick graphs? Easy!

We're growing our GDP!

A non-hockey stick graph, it's all about this:
Receipts, outlays, and debt

It's quite simple. We need a budget that spends approximately 17% of our GDP. We spend more than we take in. I don't think the sky is falling. I do think it is time to become more restrained in our spending, and time to "fix" medicare and social security.

anakinskywalker said:good points, though I wouldn't quite say that China is self-sustained. I think it's still heavily export-driven and domestic demand is low.

The article raises some points that have not been addressed by anybody:
1. Why are the M3 figures suddenly no longer being published?Because it was a meaningless number that took a lot of resources to publish. It isn't a mystery why they stopped publishing it - they said so in the Press Release: M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.
2. South Korea and some other Asian economies have started slowing down growth in their dollar stockpiles and instead diversifying into Euros. How will this impact the USD's status as global reserve currency? How will it impact the US economy?It won't. Asian economies depend on the value of the dollar. If it drops, it makes it harder for us (the worlds largest economy) to buy their stuff, and it devalues the stockpiles they already have. Any significant change in dollar accumulation policies would be akin to them tying their own noose and slipping it around their own neck.
3. China, Saudi Arabia and other dollar-hoarding countries are starting to use those dollars to buy US companies, instead of simply investing in US Govt. securities like they used to do earlier. They are going from mostly-"loaner" to more-and-more-"owner". How will this impact the US economy going forward?Not significantly. 1) Growth in these markets benefits our economy which sells to them. 2) Demand for US Government securities isn't going away anytime soon. 3) Even if demand for US Government securities does drop, we control the incentive to buy them (I.E. interest rates), so we can always increase demand.

Those who have been pointing out that US Debt is historically at the same levels as percentage of US GDP should note that historically there was no serious competitor to the US Dollar for the position of international reserve currency. Now there is the Euro. Things have changed. So being Number 30 on the list of public debt may not be good enough going forward. The USD has to compete with the Euro to win the confidence of the international finance community. Things are changing; so just keeping in step with historical levels is no guarantor of success going forward. So, the argument that "things are as bad as they historically were, so we'll continue to remain fine" has no merit.I disagree. Nations behind the Euro also hold debt levels similar to the US (some much greater).

And if you think I was saying "things are as bad as they historically were", you completely misinterpreted my comments. I believe things are as good as they always have been. I'm of the opinion that leveraging a growing asset is always a good thing.
Dismissing unpopular items such as this out of hand without due consideration is not going to help us compete and win the challenges of the future.And the challenges of the future aren't going to be "won" by irrational and unwarranted fear-mongering.

USA is highest dept nation
Spain is second highest

Is the USA Bankrupt?

CONCLUSION
There are 77 million baby boomers now ranging
from age 41 to age 59. All are hoping to collect
tens of thousands of dollars in pension and healthcare
benefits from the next generation. These
claimants aren’t going away. In three years, the
oldest boomers will be eligible for early Social
Security benefits. In six years, the boomer vanguard
will start collecting Medicare. Our nation
has done nothing to prepare for this onslaught of
obligation. Instead, it has continued to focus on
a completely meaningless fiscal metric—“the”
federal deficit—censored and studiously ignored
long-term fiscal analyses that are scientifically
coherent, and dramatically expanded the benefit
levels being explicitly or implicitly promised to
the baby boomers.
Countries can and do go bankrupt. The United
States, with its $65.9 trillion fiscal gap, seems
clearly headed down that path. The country needs
to stop shooting itself in the foot. It needs to adopt
generational accounting as its standard method
of budgeting and fiscal analysis, and it needs to
adopt fundamental tax, Social Security, and
healthcare reforms that will redeem our children’s
future..