excellent post achilles but none of that will happen to the US because there is more to it. the military presence and hegemony abroad which is part of the WWII after math and continuing decline of the former soviet union is another important aspect of the equation. since the US has the power to overtake any unfriendly regime and effectively influences the geopolitical agenda, including securing important raw materials sources abroad or exporting their franchise elsewhere in the world, this results in a important revenue stream for the US treasury in the form of taxes as the corporate america cashes on, which balances out the excesses of consumption or public expenditure. a cold analysis of the US finances reveals nothing but what other western economies have experienced as of late. going forward, the asian countries will more and more induce consumption rather than trying to unpeg their currencies to the USD. the reason being, if they do that, they'd lose 1 third of their economic output (due to the vanished demand) while their nations would starve to death due to the isolation. remember more than 2/3 of the GDP comes from western countries, thus the highly indebted consumption model that the western world has put in pace is going to be exported to the asian countries, while the US will continue to print money to pay off their debts (as any other western country), courtesy of the emerging markets and the current geopolitical scenario.
check the us public accounts and compare it with the rest of the western world and will see no difference. the asians are financing it because of their savings rate. the americans (individually) are more prone to bankruptcy than the asians but the US, as a country, is far better than the others because is an economic super power and the most important trade partner of the asians, which would NOT survive without the US playing its role. that's why the USD is not at risk in the near future (next 20 years).
money is created out of thin air. it is completely effortless task. as long as the US maintains its economic supremacy the USD is untouchable. since it will take at least 20 years to china overtake the US, there is still plenty of time to see how this matter unfolds. now, saying that the US (or the USD for that matter) is about to collapse is a ridiculous and naive assertion.
And what happens when the aforementioned raw materials are no longer quoted in USD? Also, how can anybody arrive at the conclusion that it is the USA dictating global manoeuvres when it is the Chinese who have pegged their currency at a rate which favours THEM and not the USA? If you believe the USA have the military capacity to "overtake" China then I'm afraid to say, your living in cloud cuckoo land. I'm not the type of person to attack any sovereign nation as it just isn't my style. However I cannot help but to ponder upon why some citizens of the USA continue to believe that your country can "overtake" "unfriendly" nations at will? The USA lost the Vietnam war, and hasn't managed to control a group of rocket launching cave dwellers who don't even have a sturdy pair of boots to wear, for the best part of 10 years. Recent news reports circulating within the public domain (I believe there was a thread on ET the other day regarding this issue) suggest that an increasing number of soldiers are losing the will to fight for a cause they don't understand, hardly a glowing indictment for the continuity of a revenue stream funded by way of "securing terrorist regimes", and that isn't even taking into consideration that the revenue derived from raw materials may not infact cover medium term expenses, even if it continues to be quoted in USD.
I am with you up to this point... When the banksters get legally prosecuted and are frog marched to jail in orange jump suits... then we can only start to turn this economy around... until then.. nope... not a chance.. business as usual...
ByLo' Et Tu... The Dollar is gonna stay the reserve currency... ? I am right behind you on every one of your other posts that show we are headed to hell economically and now you are saying that.. "No Problem.. when things really get dire... the dollar will just shoot up and get strong again..." Yes, the same thing happened in the early decades with extreme dollar weakness... but... but... but... This time the USA DOES NOT HAVE SUFFICIENT GDP growth to cover our long term debts and we have run out of borrowing power... Karl Denniniger shows this very clearly in his math layouts of GDP to DEBT growth... posts on his blog... http://market-ticker.denninger.net/archives/1263-Bernanke-Dissembles;-The-Economy-Burns.html Read the whole freaking blog and anybody get back to here and post that the math he puts up is wrong... ByLo'... I know you agree the economy is going to hell but somehow the Dollar is going to recover... color me way confused... and something is gonna give in the next few months and its NOT going to be in the USA's favor... The Empire Is Ova...
Clearly the US is on the defensive and will remain so until it takes action to shore up it's currency. I am not even sure it is possible any longer, given the complete disregard for the massive monetary and fiscal problems we face.
Lol, Volcker used massive deficit spending, of which not a cent was ever paid for, to create the boom times of the early 80's under Reagan. There is no such thing as a free lunch.
You boys and girls do not seem to have much faith in your beloved leaders. All they are trying to do is get you all to borrow your way out of debt. sosueme