This video scares me. We must stop it!
http://www.youtube.com/watch?v=4n3g5lUgkWk&feature=fvw
What do you think?
- When will the dollar collapse? What will replace it?
- Will Americans become poor?
- How about Europe? Which countries will go down, and which will prosper?
Every time I think about what I'm studying and how it might become very irrelevant, I comfort myself by saying that my death squad will have the best website out there.
Ska is lame and so am I.
The US dollar has a good chance of collapsing; possibly within the next 10 years. With $12 trillion in national debt, the largest current account deficit in the world, $56 trillion in unfunded liabilities for Social Security/Medicare alone, and over $99 trillion in funded liabilities overall (government numbers, imagine what they really are!) if the US stays the course, the currency is finished. It's very simple, as the government shows no signs of fiscal restraint (they get worse every year) and productivity in the US continually declines there is simply no way tax revenues can ever pay for this. Hence the only option for the US is to print the shortfall. A sound replacement could be a free market in money which may choose gold/silver but I doubt the governments around the world would ever allow this. The SDR may replace it or even perhaps the remninbi.
If the dollar collapses, any American whose wealth is stored in dollars will become poor. The US would be in chaos for an extended period of time and it would take a substantial amount of time to rebound if it ever does.
The euro is not a sound currency (no fiat money is). The EU is filled with many of the same problems as the US such as fiat money/central banking, large amounts of debt, the welfare state, labor unions, etc. I'm not sure which countries will falter and which will prosper; but I would say the UK is up the creek without a paddle like the US. Many creditors in the world are in Asia so as a region I'm assuming they are and will be in the best condition going forward.
Best regards,
Chris
The US will probably suffer a long period of seriously reduced economic activity, similar to Japan since 1991. This doesn't mean that the US will become a third world nation.
Mises Community Natural Rights Discussion Group
krazy kaju:This doesn't mean that the US will become a third world nation.
You're right. Second world at worst.
If you find something evil that wobbles, push it. - Gary North
Thomas Woods talks about the Japanese bust on Chapter of his book, Meltdown. I suggest reading that if you'd like fitting parallel to America's predicament.
krazy kaju: The US will probably suffer a long period of seriously reduced economic activity, similar to Japan since 1991. This doesn't mean that the US will become a third world nation.
The difference of course being that Japan is a creditor nation and the US is the largest debtor nation in the world. People underestimate the severity of the predicament the US is in. If the monetary system goes under, the US will be in utter chaos. What emerges out of it remains to be seen, but I don't think it is wise to rule out the possibility of it becoming a 3rd world country. I'm not saying it's a definite, but there is a possibility and I hope it never happens.
Yes to the long period of reduced economic activity if things continue like today, but there will be an abrupt drop in living standards if the day comes when central banks around the world not only stop accumulating dollars but start selling them en masse. The comparison with Japan is not a good one because virtually all of its government debt is in the hands of Japanese citizens - a more apt comparison is with Argentina, where most of the debt was owed to foreigners.
Chris:The difference of course being that Japan is a creditor nation and the US is the largest debtor nation in the world. People underestimate the severity of the predicament the US is in. If the monetary system goes under, the US will be in utter chaos.
I disagree. While I agree with the factual part of your statement, I think the underlying problem is individual relationships vis a vi debtor and creditor don't translate to the world stage. If you run up a massive tab on your CitiBank card and they come to collect, they can take action against you. A nation, on the other hand, has an army to deal with. We will likely repudiate most of our debt and should anyone have an issue with that, a trumped up war will be had with them which thanks to the redirected production efforts will give the illusion of prosperity. Or in other words if Citi came to collect and you told them to go to hell and backed that up with an aircraft carrier or two, they'd be much more likely to settle it or write it off.
Long term of course we're screwed because while we can repudiate current debt we can't force people to lend to us. Or, at least I should say, it's much harder to accomplish with diplomatic/military means.
The problem with the "goal to hell" approach is that most of the money's owed to American citizens, although blowing the crap out of Florida would probably put a dent in the numbers.
Keynes must've been a fan of Brave New World; why else would he write a book about its economics?
The US dollar will weaker but not entirely collapse. Certainly the US Economy will not collapse. My guess is that the growth of the US Government will continue and as foreign investors refuse more dollars the amount of growth will slow until eventually it stops growing or the growth becomes much less than the economy at large. Similarly the US dollar will drop until the central bank has to increase rates or face a complete liquidation dollar valued assets by foreigners.
The mean time will not be pleasant but won't be bad either. The US is still the most advanced economy in the world with enormous assets, most importantly technical assets to draw on to continue to push technology forward. I do expect that people depending completly on govenrment will either see the value of their handouts destroyed by inflation.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
What I suspect is that the State will simply grow to the point that a new culture will [attempt to] emerge which will embrace the ideology of Statism in a more intimate fashion than ever before. But this will be in stark contrast to the growing minority of people realizing the inevitable stagnation and retrograde of civilization under such a culture and political arrangement. Whether any one of us will be still alive to see this trend reverse, I can't say, but I can say that those of us alive today should be prudent in finding means to avoid as much of the State and State 'culture' as possible.
"The power of liberty going forward is in decentralization. Not in leaders, but in decentralized activism. In a market process." -- liberty student
USD is world's reserve currency so I don't think that anyone wants hyperinflation to happen. More likely is a gradual replacement of USD with some kind of a world's currency. There has been a lot of talk about it lately.
If I hear not allowed much oftener; said Sam, I'm going to get angry.
J.R.R.Tolkien, The Lord of the Rings
I do not care about the dollar... I believe in American People and their Spirit!
The US wont be a third world country any time soon. We have a lot of capital in this country, and even with gross domestic investment tanking we have a long way to go before we go back to anything like a subsistence economy. It took about 60 years of good emperors for Rome to reach its peak, and 350 years of serious economic fascism to create a dark age. There is a small chance that the Bush administration is the beginning of the end of our civiilization, but if that end will come it is a long ways away.
The Spirit of Americans isn't any greater than anyone else. The freedom the American Experiment started with and is holding onto is what drives it. Unfortunately, since October 1929 this freedom has been under attack and the attack is getting worse. The Spirit of America has gone down as the freedomes have been taken away.
Some places in the U.S. already seem very poor. When I went on a road trip to western Canada with my dad we went around the south of the lakes. We couldn't find a single ATM the whole way, we had to sleep in the car beside railroad tracks because the lodges were so awful and the buildings in Michigan looked worse than a housing project. It wasn't until we hit Duluth in Minnesota that signs of civilization reappeared. We went north of the lakes on the way back.
Michigan is getting its ass kicked. It will be even worse 3 years from now. The bailout to the automakers was just a bandaid.
Ludwig von Mises Institute | 518 West Magnolia Avenue | Auburn, Alabama 36832-4528
Phone: 334.321.2100 · Fax: 334.321.2119
contact@Mises.org | webmaster | AOL-IM MainMises
Mises.org sitemap