What he said
Ok, so when I was fumbling in my econ-and-math-impaired way about my unease over the fading Empire and the tumbling dollar, I think what I was really trying to get at was this.
Now I just need a credible link to help me articulate why I think the current administration is going to do to our place in global affairs what Reagan did to the nation's social fabric.
Now I just need a credible link to help me articulate why I think the current administration is going to do to our place in global affairs what Reagan did to the nation's social fabric.
1 Comments:
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Anonymous said...
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- 9:25 AM
Post a CommentOf course, the author of that article does have an axe to grind in the form of a book, the subtitle of which is "How to Profit from the Coming Economic Collapse!!!" (Note: exclamation points are mine, but they are 100% intended by the author, I can tell).
There is a fallacy to his argument in his presumption that China (and other creditor nations with dollar pegs) will allow the local currency to rise against the dollar. Yes, these governments are effectively subsidizing American consumption by keeping their exports cheap (in USD terms), but one of the reasons they're doing this is because Americans are proven consumers.
The same cannot be said about their domestic populations. Pardon the stereotype, but Asians are savers; I think I saw figures suggesting that the savings rate in China is 30% to 40% of disposable income. (Americans' savings rate is 2.5% of DPI, I think; or maybe that's the Brits' rate -- I can't remember.)
I suspect that the Chinese government is worried about tackling domestic inflation (by raising interest rates, which also tends to result in an appreciating local currency) because it does not know whether its factories would willing buyers for their goods.
Don't get me wrong: I am a dollar bear in a big way. I despise the current administration for lots of reasons, but the biggest one is that it is the least conservative fiscal government since Reagan and possibly ever. Tax cuts for the rich, $2T for Iraq (all "off balance sheet") and a prescription-drug benefit with no one paying for it. These things will kill us just as much as refusing to do our part in the Kyoto Protocol.
Harumph.
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