Quote:
Originally Posted by worker4youth
How did you come to this conclusion?
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Well, there are lots of things going on, and they all look bad. In no particular order, and kinda out of my head as I'm going because I'm at work now:
1. We are living in peak oil right now (and no, I'm not a conspiracy theorist, I'm a bike messenger and an economist), and China happens to be undergoing massive industrialization with a corresponding thirst for the black gold. India isn't too far behind with another 1 billion+ people. When they start bidding up the price for oil (not to mention that they're a lot closer to the Middle East than we are and are pipeline-able, which means that they can offer much more for the oil than we can due to vastly lower delivery costs. A crunch on oil for the US is going to be devastating for a country more addicted to the stuff than any other. We have higher average commutes and higher origin-to-table delivery distances for food than any other nation. Net result is that this is going to be VERY costly for US consumers...probably more than we can handle.
2. China has been financing our spending on a massive, massive level for years, now. The Chinese central bank is the one and only reason that there has been very little inflation in recent years. As the US has turned to a largely service-based economy and a net importer to the tune of hundreds of billions of dollars (over 200 billion dollar trade deficit with china in 2005), US currency has concentrated out of the country. Normally, if there was such a massive trade imbalance, the chinese currency would rise against the dollar, causing chinese goods to become relatively expensive and cutting down imports. The dollars would flow back into the US economy as the Chinese bought relatively inexpensive US goods and it would all balance out. The Chinese central bank controls the trade ratios, though, and is buying up the dollars from Chinese factories. This allows them to industrialize the country at the expense of US consumers (and their own environment and workers.)
Eventually they'll decide to float the currency, though; and when that happens China will be sitting on trillions of US dollars in cash and US corporate and gov't bonds. Our economy will take a huge hit as everything produced in China (which means pretty much everything at Walmart and half the other goods in the US) will become very expensive. Meanwhile, a new trillion-dollar player (the Chinese central gov't) will be very heavy-handed in the market, and their primary concern will most certainly not be the well-being of the US consumer.
3. The current US gov't is financing worldwide plunder, enriching the rich, and their own political agenda at the expense of future taxpayers. Massive budget shortfalls for things like bombs and missile defense systems and bridges to uninhabited islands being coupled with tax cuts for those at the top is a recipe for disaster. No reputable economists actually believe in trickle-down economics (most who push tax cuts are actually 'starve the beast' economists who are hoping that the loss of revenue will cause the gov't to shrink even though they try to sell the scheme as revenue-generation.) Net results are that the US as a country is falling further into debt as we enrage most of the people in the rest of the world and a large, poor, and increasingly restless population at home.
I've got more, but I've gone on long enough to bore most of you and confuse myself, and I really should be doing some work. I'd love to chat economics on bike rides with any of you, though!
