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Yes but that has changed or is changing. We are building up significant risk. The rest of the world may well be in worse shape but we aren't doing well long term and I don't see the kind of things happening that need to happen to get us turned around.
The risk is in the minds of those who do not understand the nature of our fiat. And there are many that don't. As long as we remain productive and secure as a nation little will change. Long term I would bet on more competition from China, but that does not mean the demise of the USA by any means. Our economic world will be larger by then.
Nope, won't happen for a very loooong time, if ever. China has its own issues, and has a far lower credit rating than the US for that reason. It is, after all, still a developing country. When the day comes that China becomes a fully developed nation (if it ever gets quite to that level), and is a big stable economy with more of a world wide partnership with other nations then maybe it could challenge the US for reserve currency.
The risk is in the minds of those who do not understand the nature of our fiat.
That has a pun in it that is truly funny. Have you seen the commercials for those Italian cars? The export of those wasn't financed with printed money. But a lot of the trade deficits we run are.
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Originally Posted by Hoonose
And there are many that don't.
you got it.
Quote:
Originally Posted by Hoonose
As long as we remain productive and secure as a nation little will change.
What are the trends for outsourcing? trade deficits? etc.?
Quote:
Originally Posted by Hoonose
Long term I would bet on more competition from China, but that does not mean the demise of the USA by any means. Our economic world will be larger by then.
Not the demise of our country but our dominant position in the world. We are trading it for cheap foreign goods. The purchase of witch is financed with printed money.
China doesn't need a global currency to challenge American power. The best way is what they have done, by increasing their affluence and national wealth and capabilities. Meanwhile american businesses have themselves decreased the overall prosperity of the United States. Today a lot of americans face employment hardship and economic issues. With tuition high and salaries low, in about a decade, what used to there will have little left. The chinese middle class will be much bigger and wealthier. These things are a matter of usually a decade or two and changes happen. China is already the biggest trading partner of a lot of countries and largest source of tourists. This means china has a lot of leverage on global businesses alone. Making friends with china gets you many benefits just like how the US was able to court allies with its strong middle class.
China needs to become a friendly superpower not an angry one. It may have more luxury and leverage economically. Build strategic and geopolitical alliances by rewarding allies economically in ways the US can't. Build educational and cultural exchanges widely and promote popular culture with chinese values embedded but not purely distant chinese culture. Win hearts and minds across the third world. Work out a plan to be friendly to its neighbors instead of pushing them toward the US. Build shanghai into the global financial center. Position itself as the worlds auto manufacturing center as well as a rising high tech innovation zone.
Most importantly work closely with major international companies. It is in their interests to work with china. Don't bully them. Draw them. China's advantage is it's enormous consumer population and labor market.
China doesn't need a global currency to challenge American power. The best way is what they have done, by increasing their affluence and national wealth and capabilities. Meanwhile american businesses have themselves decreased the overall prosperity of the United States. Today a lot of americans face employment hardship and economic issues. With tuition high and salaries low, in about a decade, what used to there will have little left. The chinese middle class will be much bigger and wealthier. These things are a matter of usually a decade or two and changes happen. China is already the biggest trading partner of a lot of countries and largest source of tourists. This means china has a lot of leverage on global businesses alone. Making friends with china gets you many benefits just like how the US was able to court allies with its strong middle class.
China needs to become a friendly superpower not an angry one. It may have more luxury and leverage economically. Build strategic and geopolitical alliances by rewarding allies economically in ways the US can't. Build educational and cultural exchanges widely and promote popular culture with chinese values embedded but not purely distant chinese culture. Win hearts and minds across the third world. Work out a plan to be friendly to its neighbors instead of pushing them toward the US. Build shanghai into the global financial center. Position itself as the worlds auto manufacturing center as well as a rising high tech innovation zone.
Most importantly work closely with major international companies. It is in their interests to work with china. Don't bully them. Draw them. China's advantage is it's enormous consumer population and labor market.
All of this COULD happen someday, but it would be a long ways off. We hear about China's growth and we know they are improving greatly, but the reality there if you go there is that it is still very much a developing country. It is nowhere near Japan or Korea in the level of overall development, you see it even in the large richer cities, it is very much a nation of modern mixed with run down poor looking areas. For every shot of shiny, gleaming modern buildings you see there, you have equal amounts of "wow, what poor 3rd world country is this". There is a rising rich and middle class, but still a massive poor segment of the population- still something like 2/3rds of China is extremely poor. They have their own issues with a lack of natural resources and with dealing with that poverty, and with their own potential credit crisis as a significant portion of their economy is in a bubble- so there is no "sure thing" about China becoming this gleaming, developed nation that can come out and lead the world. Sure it could happen- someday they could get to that level, but it will take a long time- lots of things for that nation to deal with to truly become developed and have its entire population live a developed lifestyle, and to them have all the things fall into place that would go along with that, as you were mentioning.
Maybe give them another 50-75 years and we'll see, it's possible they will keep climbing and will overcome all of those things to get to that level.
"Don't ask what might happen should the PBOC finally decide to call a halt to this policy. That's grim. Let's not go there." from the link you provided.
I agree with you that no one trusts china farther than they can pick them up and throw them. But what happens if china changes policy as the last line in the article suggests? A complete policy reversal would be to dump their USD holdings. Sounds like fun to me. let US go there!!! Ra Ra Ra!!!
It isn't trusted it isn't... But what of the future?
There is a rising rich and middle class, but still a massive poor segment of the population- still something like 2/3rds of China is extremely poor.
2/3 of 1.2 billion= 400 million aren't dirt poor. We are 300 million and getting poorer. The old workers are retiring. The long term out of work ones are getting SSI now instead of unemployment.
China is growing aggressively. We are contracting. Wake up and smell the Roses. Hit the brakes before we hit the wall. we need a wall to keep Mexicans out. They keep their poor out of their cities to keep them from being over run. Your time estimates are way off. 1/2 to 1/4 the time is when things will get bad and they will at China's choice not ours.
Not the government debt per se but our ability to service it.
In a technical sense you are correct. But in a practical sense you aren't.[/quote]
US cannot go bankrupt... We print out own currency. Not servicing it only occurs if government forces that to happen.
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Originally Posted by ContrarianEcon
And we aren't?
We're not the Euro.
Euro nations can go bankrupt because they cannot print currency. Big difference.
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