<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/QzD1w4Y9IpQ&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/QzD1w4Y9IpQ&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
I have to laugh every time I hear somebody say this. Let's see...back in the 80's and the 70's when America was a net exporter and the world went into a deep recession....guess who that hurt the most? Yep....THE CREDITOR NATION. Being a creditor in a massive recession is NOT what you want to be. You are much better off being a debtor. You can inflate your way out of debt, but when your economy is completely tied to others paying you back, you're pretty much screwed. Let's fast forward to today. When we come out of this recession, and the US which has the highest productivity in the world transforms into a saver nation, and all this demand happens all around the world that somehow is going to "hurt" the US, guess what will really happen? A saving United States and a consuming Asia means nothing but a complete advantage for the US since we have the highest productivity and the ability to produce and invent. Let that dollar sink as the world demand skyrockets. Contrary to all the doomsday sayers...we are in the perfect position. Net debtor (we can inflate our way out)...high productivity capabilities, and a weak dollar due to our inflation which will make American goods much cheaper to produce overall. I'm SOOOO shaking in fear.
It's extremely annoying to present facts and still get stupid idiocy like this as a reply. I'm outta here.
based on your last paragraph;....basically we'll be come China...and they become the USA have you seen how the masses live in china vs the masses here this sets up the country to have less purchasing power and commodities to be almost unaffordable to the avg american good luck with that one d
No...not quite for 2 reasons. Number 1: We would be exporting real technology like Ipods, RIMM devices, software, green technology...etc. Not little metal trinkets and pots and pans like China exports to us. Therefore, our exports are worth a bit more in value. Number 2: If China is worried about losing its export markets, and it needs to spark local consumption, it will be required to no longer artificially depreciate its currency in order to give its citizens actual buying power. Since the US doesn't artificially depreciate our currency, and it trades in an open market, purchasing power of parity would prevent the dollar from collapsing too much. Otherwise, American exports would essentially drown out everybody else. A fiat currency in a highly productive country won't collapse uncontrollably due to market equilibrium. Increasing local demand in China will force them to play a bit fairer with their currency.
Good luck with all that. Me thinks the Chinese will do whatever the hell they feel like as they're basically funding a good and necessary chunk of our government deficit spending. I won't even bother responding to the rest of your points given that you think the U.S. "exports iPods" when they're made in China for Apple (like everything else Apple makes, and everyone else makes, for that matter).
You're missing the point. If China has lost its export market, it will be FORCED to increase demand with the Chinese citizen. And good luck increasing the ability of the average Chinese to spend without increasing the value of those Yuan's they use to buy their goods. There is no "China will do whatever it wants"...there is only one real choice for them and it FORCES them to take a maneuver that gives an advantage to the US in order for the Chinese economy to continue its obnoxious growth. You know...kind of like how we had to give the Chinese an advantage in order to fund our growth? You can't have your cake and eat it too. Your competitors are going to get some of your cake if you take steps to grow your own economy one way or the other.
Oh and don't respond. It's apparent that you don't have the ability to look past that dark hole that you've dug yourself into and actually looking at macroeconomics from a more rational point of view.
btw...to the casual observer...notice how none of my points about market equilibrium are ever addressed by the doomsday crowd. They stick to their talking points no matter how irrelevant they are.