Joe Doaks and Scataphagos, you guys honestly blaming all this on obama? lol no your right lowering taxes and financing a war didn't have much to do with the deficits, yea your right. morons
He has been too hyped up, there is no hope and change coming. For some reason as well, the unemployment rate can never go above 10% when things are so bad out there, there is defo some skullduggery going on here. time to wake up
Actually the problem might be that the world now needs a BORROWER of last resort, because the world may be working on paying down the debt and/or increasing savings, and therefore if no/enough borrowing takes place, the GDP would head down. Therefore, the world will be "begging" the US to borrow. I believe the chinese understand it, and that is why they have been lending to the US. The problem for the chinese might be if the USA decides not to borrow from them, and borrow from inside (US) instead. This can create havoc for China, because their GDP can fall as a result of their savings not converted to spending. In a deflation, being a trusted wanted borrower can become an asset, and not a liability. The other solution could be to have the third world countries do the borrowing, and have the trusted borrowers backed them up, and get a piece of the work done in those countries as a result of this backing up.
First + Second = Fed can create trust out of thin air. That's obviously false, therefore one or both of your initial statements must be false.
Third world world currencies are not reserve currencies, and are not the unit of exchange in commodity prices. The dollar does not have those two problems. Think about it a bit more.
"That's obviously false": why? Consider the case where the world is leveraging. There could be demand for US debt, not because they want it, but because they need it.
I doubt you have a clue. Reserve and dollar-priced commodities didn't stop the Nazdaq, real estate, banking, DJIA and oil bubble. Did it? Whether the dollar implodes, or most G20 currencies flush together, is immaterial. We'll either see a dollar collapse, or a world-wide commodity explosion.
why would any foreign creditor actually believe that the US can pay off its debts when its even larger than China's reserves?
the $US role as a reserve currency is diminishing. how many months or years will pass before there are negatives consequences for the US economy? how long before commodity prices particularly for rare metals are priced in yuan rubles and basket of other currencies? "Niall Ferguson,scholar of empire and professor of history at Harvard says contrary to popular opinion, empires fall swiftly and the US will cut defence spending and withdraw its forces from the world as its deficit rises to insurmountable levels. http://www.theaustralian.com.au/news...-1225898187243 * Niall Ferguson * From: The Australian * July 29, 2010 Niall Ferguson is professor of history at Harvard University. WE have been raised to think of the historical process as an essentially cyclical one. We naturally tend to assume that in our own time, too, history will move cyclically, and slowly. Yet what if history is not cyclical and slow-moving but arhythmic, at times almost stationary, but also capable of accelerating suddenly, like a sports car? But there comes a moment when complex systems "go critical". A very small trigger can set off a phase transition from a benign equilibrium to a crisis. Think of Spain in the 17th century: already by 1543 nearly two-thirds of ordinary revenue was going on interest on the juros, the loans by which the Habsburg monarchy financed itself. Or think of France in the 18th century: between 1751 and 1788, the eve of Revolution, interest and amortisation payments rose from just over a quarter of tax revenue to 62 per cent. Finally, consider Britain in the 20th century. Its real problems came after 1945, when a substantial proportion of its now immense debt burden was in foreign hands. Quietly, discreetly, the Chinese are reducing their exposure to US Treasuries. Perhaps they have noticed what the rest of the world's investors pretend not to see: that the US is on a completely unsustainable fiscal course, with no apparent political means of self-correcting" http://www.elitetrader.com/vb/showthread.php?s=&postid=2911886&highlight=spain#post2911886 http://snipurl.com/103k87