How much longer before America collapses economically?

[hellas1]

Hey all,

The title wasn't meant to be hateful, only querisome.

What do YOU think about the American Economy and Do YOU believe it'll collapse?

What will be the effects of the consumerist dream country gone? (I.E. America)

Comments?
hellas1.....0.......-1............enormous deficit!

[ShADoW]

US wont collapse it will pull its way back up.

[nopasties]

We'll know when much of the third world's economy starts to collapse first. The US is somewhat insulated by the US dollar and other advanced economic mmmmmm........ stuff

[hellas1]

@nopasties,

Thank you for your insight, I appreciate it.
Please don't take the following as a slap in the face or insult but just consider what I say, please:

"Insulated by the dollar?"
Sir, when you go to Greece, the American dollar is equal to .60 of a Euro.
What "insulation" are you talking about?

Also, We know that 3rd world countries such as in Africa are dirt poor anyway man!

What about China? It's banks use the Capitalist model but China is Communist!

What about Europe? The Euro and Pound are stronger than the American dollar.

Comments anyone?
hellas1

[nopasties]

@nopasties,

Thank you for your insight, I appreciate it.
Please don't take the following as a slap in the face or insult but just consider what I say, please:

"Insulated by the dollar?"
Sir, when you go to Greece, the American dollar is equal to .60 of a Euro.
What "insulation" are you talking about?

Also, We know that 3rd world countries such as in Africa are dirt poor anyway man!

What about China? It's banks use the Capitalist model but China is Communist!

What about Europe? The Euro and Pound are stronger than the American dollar.

Comments anyone?
hellas1

Much of the commodities markets are dollar backed for example, almost the entire oil market is backed by dollars. I don't feel like looking it up for accuracy and stats but the US is able to sell treasury bonds in an inverse relationship lately. The latest financial spill originated from US debt but as the problem spread investors bought Treasury bonds for percieved security. People invest in the US economy based on perceptions. Everything is now tied to perceptions and because of the last 60 years of US dominance the US has more checks and balances than other economies. The US can print trillions of dollars backed by nothing because of our financial sector that pawns worthless debt off on the rest of the world. It's a complex and weird relationship I know, I don't understand it all to be honest but that's why I say much of the rest of the world will be devastated first until the US loses more and more of these checks.

[Tiwaz]

Much of the commodities markets are dollar backed for example, almost the entire oil market is backed by dollars. I don't feel like looking it up for accuracy and stats but the US is able to sell treasury bonds in an inverse relationship lately. The latest financial spill originated from US debt but as the problem spread investors bought Treasury bonds for percieved security. People invest in the US economy based on perceptions. Everything is now tied to perceptions and because of the last 60 years of US dominance the US has more checks and balances than other economies. The US can print trillions of dollars backed by nothing because of our financial sector that pawns worthless debt off on the rest of the world. It's a complex and weird relationship I know, I don't understand it all to be honest but that's why I say much of the rest of the world will be devastated first until the US loses more and more of these checks.

Ah, but you forget that US dollar is noted only because oil market is pegging to it.
That is why USA reacts so radically, and potentially violently, when OPEC or oil producers in general raise possibility of selling oil in Euros or other currencies.

If oil peg disappears, most demand for USD disappears overnight.

US economy lives and dies with it's ability to hold monopoly of USD in oil transactions. And as USD loses value due to US economy showing signs of having it's balloon burst, with no sign of debt accumulation ending in future... Oil producers start to see dollar as more and more as problem.

One day, in not so faraway future, OPEC will renounce dollar peg and US economy will take next fall.

[Trey]

@nopasties,

Thank you for your insight, I appreciate it.
Please don't take the following as a slap in the face or insult but just consider what I say, please:

"Insulated by the dollar?"
Sir, when you go to Greece, the American dollar is equal to .60 of a Euro.
What "insulation" are you talking about?

Also, We know that 3rd world countries such as in Africa are dirt poor anyway man!

What about China? It's banks use the Capitalist model but China is Communist!

What about Europe? The Euro and Pound are stronger than the American dollar.

Comments anyone?
hellas1

Take a browse through your Econ 101 book.

[S.L.I.G]

It's impossible to tell when the hyper inflation will set in, the dollar being abandoned, etc. I doubt its more than a year away, however. Theres only so much debt you can pile on...

[Imperator Romani]

Our economy is recovering now. Alot of the news says the worst is over...I sure hope so.

[nopasties]

Our economy is recovering now. Alot of the news says the worst is over...I sure hope so.

[Caelius]

United States of America: A wholly owned subsidiary of the People's Republic of China

Actually its the other way around.

China is essentially America's Walmart, and anyone in retail knows that the customer is always right, so you make every effort not to upset them and the income they bring.

[Phier]

With Obama anything is possible!

[Legionem Insanis]

United States of America: A wholly owned subsidiary of the People's Republic of China

[Oldgamer]

United States of America: A wholly owned subsidiary of the People's Republic of China

I never thought the day would come that I would agree with such a statement. However, at a rate of $150 billion short-term treasury bonds sold per week ... geez, my calculator doesn't even go that high, over 52 weeks!

The worst part of the "American economy collapse" scenario is that it spreads throughout the world. The US economy is the world economy. A friend of mine in the Treasury Department stated to me that the bottom will fall out of the US economy when Obamacare becomes law. He expects some 100 million people - at least - to get rid of their private health insurance and go "free", which will cost untold trillions of dollars.

Everyone should get their wheelbarrows ready ...

[roy34543]

"Insulated by the dollar?"
Sir, when you go to Greece, the American dollar is equal to .60 of a Euro.
What "insulation" are you talking about?

Thinking that a currencys is only "Good" if its worth more on the world market is showing massive ignorance in economics, Some countries intentionally keep their currencies worth down

[Tiwaz]

Thinking that a currencys is only "Good" if its worth more on the world market is showing massive ignorance in economics, Some countries intentionally keep their currencies worth down

Those who want to export stuff keep their currencies down. Like China does.

But if you want to buy, you have to keep your currency value up.

Problem comes if you want to sell but currency you sell in is high valued (unless it is something essential which everyone just has to buy from you, like oil).

And even worse issue appears, if your currency is worth peanuts bu your do not sell but BUY stuff in huge amounts. This is the problem USA now has.

For everything USA buys, it has to shovel increasing amount of dollars. Benefit for exports are not enough to counter this, as USA has become system which exports rather little, most industries are aimed at internal consumption, but imports insane amount of stuff.

This internally turned production is also what has left many US industries highly wasteful. Like steel industry in Bush regime which needed support to learn to be efficient when facing competition. And now US car industry is suffering from it's own years of ignorance as their products are losing their attraction.

[roy34543]

Those who want to export stuff keep their currencies down. Like China does.

But if you want to buy, you have to keep your currency value up.

Problem comes if you want to sell but currency you sell in is high valued (unless it is something essential which everyone just has to buy from you, like oil).

And even worse issue appears, if your currency is worth peanuts bu your do not sell but BUY stuff in huge amounts. This is the problem USA now has.

For everything USA buys, it has to shovel increasing amount of dollars. Benefit for exports are not enough to counter this, as USA has become system which exports rather little, most industries are aimed at internal consumption, but imports insane amount of stuff.

This internally turned production is also what has left many US industries highly wasteful. Like steel industry in Bush regime which needed support to learn to be efficient when facing competition. And now US car industry is suffering from it's own years of ignorance as their products are losing their attraction.

Its simply not possible for an economy to ONLY buy or ONLY sell, You need to have a balance of both you cant have a worthless currency and expect your economy to work, and you cant have a super overvalued currency because you wont be able to sell anything from your country.
The US's currency is hardly worth peanuts, I believe there are only two stronger currencies, the pound and euro, if you assume that Americas economy is dysfunctional because it has a currency thats not worth "enough" then it would seem dozens of under countrys fall prey to the same problem. (and America does export btw, It imports more then it exports, but it still exports a lot)

[Tiwaz]

Its simply not possible for an economy to ONLY buy or ONLY sell, You need to have a balance of both you cant have a worthless currency and expect your economy to work, and you cant have a super overvalued currency because you wont be able to sell anything from your country.
The US's currency is hardly worth peanuts, I believe there are only two stronger currencies, the pound and euro, if you assume that Americas economy is dysfunctional because it has a currency thats not worth "enough" then it would seem dozens of under countrys fall prey to the same problem. (and America does export btw, It imports more then it exports, but it still exports a lot)

Of course all nations import and export. But they rarely if ever do it at levels which are balanced 50/50.

As for American economy...
It is dysfunctional because it cannot PAY for what it buys without loaning money.
USA cannot live by loaning more and more eternally. Sooner or later money will run dry for USA, and at that point USA has uncompetitive industries (which have dedicated themselves to internal markets which no longer has money to buy and produces items which do not do well on external markets) which cannot increase exports and huge INTERESTS to pay every year for every dollar USA has loaned.

At that point USA is really, really deep in .

USA exports peanuts compared to it's imports.

$1.377 trillion f.o.b. (2008)
Imports $2.19 trillion c.i.f. (2008)

For every dollar USA gets from exports, it sends out 1,6 dollars out. Where does this 0,6 dollars come from? Magic wall?

I'll tell you. It comes from debt. And all debts must be paid sooner or later.

[Sidmen]

Considering that the US economy is the thing that keeps all other economies afloat (by importing tons) it is extremely unlikely that it will ever completely fail.

[JP226]

As for American economy...
It is dysfunctional because it cannot PAY for what it buys without loaning money.
USA cannot live by loaning more and more eternally. Sooner or later money will run dry for USA, and at that point USA has uncompetitive industries (which have dedicated themselves to internal markets which no longer has money to buy and produces items which do not do well on external markets) which cannot increase exports and huge INTERESTS to pay every year for every dollar USA has loaned.

I've got a fun question for you, if you can lend at 10% and borrow at 3%, what's the problem?