Monetary Policy and Weaseling Out of Debt
Posted by Gail the Actuary on August 28, 2007 - 3:00pm
Topic: Economics/Finance
Tags: balance of payments, debt [list all tags]
This is some correspondence between me and an an individual known here as Shunyata. Shunyata is an individual who is involved with managing financial derivatives. Shunyata's education and careers have spanned several disciplines, including actuarial science, statistics, mechanical engineering, and financial engineering. These have given him a breadth of perspective on the world's financial situation.
Dear Shunyata,
Some of the financial things I have been reading lately are downright alarming.
I keep seeing comments by people concerned that other countries will cut off the US debt spigot.
One concern is the huge amount of sliced and diced debt that has been sold around the world with very questionable assets behind it.
Another is the US Balance of Payments:
https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...
A third issue is the extent to which countries are unhappy about the US overstepping bounds militarily.
Any thoughts?
Sincerely,
Gail
Dear Gail,
At the risk of sharing too much opinion, I will speak frankly about my perspective. Of course these are entirely my PERSONAL opinions.
The current prosperity of the US is the same prosperity seen in a person with a large home loan, a large car loan, and a mountain of credit card debt. He's living lavishly and living at the mercy of his creditors. The US is VERY affluent and has a LOT of debt. And taking the Machiavellian view, the US likes spending other people's money and has no wish balance its accounts if it can borrow without genuinely repaying.
How do interest bearing loans get repaid? There are three ways:
1. Devote your future productivity to repaying principal and interest (this is painful and no one wants to think about this).
2. Expand your monetary wealth through efficiency gain (exceedingly difficult) or converting your assets to cash (e.g. pumping oil out of the ground or consuming other endowments).
3. Inflate your way out of debt (more on this, and this scares me the most).
A huge amount of our expanding economy (and hence easy debt repayment) has come from consumption of our natural endowments. You only need to look at the correlation between energy consumption and GDP, both across time and across nations, to see that we have been relying heavily on 'spending the inheritance'. This realization will slowly dawn on us, although not voluntarily, and we will modify our behavior accordingly whether we like it or not. There is a nice graphic comparing a photo of the dark side of earth from space with a map coded for per capita GDP. It shows electric lights (energy consumption) line up exactly with per capita GDP!
The inflation angle is more insidious because we are talking about monetary policy. So long as people think they NEED dollars, the US can print as many as they like and in effect simply print money to pay off its debts. In the '70s we went off the gold standard (so that a dollar's value is based in demand for dollars rather than intrinsic value) and negotiated with the Saudis to trade physical protection from hostile neighbors for an agreement to conduct all oil transactions in dollars. What a coup! Now everyone who needs oil needs dollars and we are all too happy to provide them. (There is evidence/conjecture that dropping the gold standard and establishing dollar-denominated oil was a deliberate, coordinated plan.) Rising oil prices are our friend because we can print more money to pay off our debts and at the same time mitigate the US impact of rising oil prices. After all, there are more dollars floating around to buy it! Why do you think the economy hasn't been crushed by $70 oil and $3 gasoline?
This coup is threatened from several fronts:
1. Economically competing countries like China hold vast reserves of these dollars we have been printing. They are also wise to the fact that their dollar reserves are being eroded away by the day as we print more dollars. (The Saudis are also well aware of this. They are are effectively only getting$50/bbl thanks to the diluted dollar.) They have begun selling their dollars thereby reducing the global demand for dollars and our ability to inflate our way out of debt. Heaven help us if we ever really annoy them. They could destroy our country over night by flooding the world with dollars - more certainly than a nuclear strike! In fact, China has leaked military documents to this effect!
2. Several countries are moving to euro-denominated oil bourses - further eroding demand for dollars. The first Iraq invasion was within a few months of Saddam moving to set up just such a bourse. Iran launched one earlier this year. Unfortunately I'd say a US military reaction is within the realm of likelihood, if not outright probable.
3. The rest of the world is becoming concerned that our currency (and ability to purchase goods or repay debt) could collapse catastrophically. You see comments from various central banks to this effect, although very obliquely.
The net impact is that the dollar has been hemmoraging furiously for the last year or so. The US and Canadian dollars are virtually one-to-one now! So far this has been an orderly and tame development. But the currency markets are wanton and can move catastrophically with lightning speed. And if our currency collapses we will have no time to even think of a response. Instantly we will lose all global purchasing power and all ability to borrow.
If we are running out of resource endowments and we can't inflate our way out of debt, our only recourse is to tighten our belt and divert our productivity from leisure (and hopefully not subsistence as well) and apply it to debt repayment. I fear interesting times lie ahead.
Regards,
Shunyata
What do you think? My note doesn't mention other issues like the tight oil supply. This is the opinion of one individual. Does this make sense to you? Are there some happy endings that might come out of all of this?
Shunyata,
Thanks for your comments! Anything you would like to add? For example, any ideas about how the derivative market will be able to handle the increased volatility we have been seeing lately? Another example--are there any recent things in the market that stand out to you?
I do want to comment on the ability of the derivatives market to cover the dislocation and volatility that is already arising. Derivatives are strange beasts and commodity derivatives especially so. These instruments do not necessarily behave as one expects and a large influx of naive players (desperate to cover their risks in an exploding market) can easily change the nature of the game to everyone's detriment. I want to carefully think through how I present these ideas, however, and it will be a few days before I can respond.
- Shunyata
Why not put some math behind this discussion? These arguments are largely rhetorical and essentially moot unless you can show a mathematical progression to a Ponzi collapse or stabilization. It may not in fact be possible to show this mathematically, but somebody really should try. TOD is renowned for this kind of thinking, and it is the sure-fire way we can get some fresh and new insight.
"Empire of Debt" puts math to it. The problem with putting math to it is that you start to find out that the real numbers have been hiding behind the facade of sanity in the markets.
As long as we keep the argument rhetorical, we don't have to think about how bad it really is. Just like oil and food production.
Thanks, I see that this is a book by Bill Bonner. I will try to check it out.
This pitiful war in Iraq has increased military spending to levels similar to what was done during WWII in terms of percentage of GDP. It would be better to leave the Iraqis alone. Before Bush went making false accusations and guns blazing fire saying, "Bring them on." They had more peace, less torture, and integrated neighborhoods. A war of aggression is not a good return on investment for there might be hell to pay afterward.
There was once a balanced budget and it is time to try to get the government to be more responsible instead of some out of control leviathon going shopping and hiring more bloated beaurocrats on borrowed credit. In such times it is good to have some savings and paid for assets.
U.S. military spending is 3.7% of its GDP. In WWII, U.S. military spending peaked at 37.8% of GDP:
http://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Nasguy,
Back in those days the US had a lock on manufacturing, now it has a lock on debt. That 3.7% GDP as well has greater leverage when the US is fighting a dirty war rather than one considered by the populous as morally right and noble.
Really how does the GDP then compare to the GDP now? Hurricane Katrina and putting the obese on life support is considered plus in the ledger book of GDP.
As well, I can't even begin to imagine what life would be like in the US if that 3.7% rose to 37.8 % ... maybe pretty good, with full employment and personal savings rising until the oil ran out and the world left a smoking ruin.
Remember, the liars are keeping the "war on terrorism" off-budget. The official budget is $500 billion, the war budget is over $100 billion, and parts of military obligations are hidden in the Department of Energy and the Department of Veterans Affairs - both of which will explode.
Finally, there's the vast amount of extra deficit spending over the decades from the military, which have been turned into permanent interest-bearing debt. And interest rates are heading up again. Figure it'll soon be $300 billion a year in added interest payments?
So this puts us at the levels of the Cold War, against an opponent so puny that it would be invisible against the mighty Soviet war machine that also turned out to be largely a fraud.
Unless what we're really paying for is the empire of bases in 130 countries that mostly pre-dated 9/11. Why didn't we close those down to concentrate on what "really" matters?
Good stuff Shunyata. Nice connection between money and resources, most people overlook this obvious starting point, and this is because once the unaccoutable fiat world has had enough effected deployment of time to let the rot work its destructive majik into minds, then with a generation or two we tend to get the outcome we ultimately deserve....we shall indeed see if something for nothing can be fiatfully imposed for much longer, lest infinium.
Shunyata also gave a slight mention of the defunct gold standard, which shows a bit of eco courage. The greater wandering masses and boob-tubed trained populace of this nation relates any mention of Au as a shiny yellow relic of the past. It has become associated with bad taste in jewelry and false teethy villains. That perspective of thought is not entirely incorrect concerning the properties of the physical usefulness of the metal despite the relative scarcity. BUT, the real worth and objective of Au (or any commodity untamperable and scarce) concerning the medium of money and its fiat issuers is this; currency has to be accountable, and good mediums of exchange should instill a storable worth of labor in the process. (also backed by the same physics) To do this requires discipline. The fiat dilemma revolves around anything that comes up (ethanol, and easy no pay til next Tuesday 2009 mortgages for example) and can invoke the false credit power in this opposites of true progress. Once again, this is because fiat begets nothing but more fiat. Fiat only understands itself and it really matters not if the journey is worthwhile or if it remedies any so-called problem in progress. In the silly unchecked quants, thus it is only concerned with replication of itself and the false progress is just another blind wave in it's wake.
An example of a blind wave would be people who extrapolate deeply into fiat money charts with greater hopes of discerning the next wave. (fiat profit economics)
Unbacked fiat backs itself up under the guise of progress, yet it can not understand much beyond itself (capitalism built on unbacked fiat - issued under the finite petro dollarium lately) Endorsements run the fiat mill of progress and the subsequent bullshit politics to sustain this hologram of unsustainable "Don't look beyond my feet attitude". Any solutions, however bright or bleak, first have to weather this multi-tierd fiat cobbled web of nonsense. This of course MUST happen before any reality runs out/dry.
Gold is/was a worthwhile check against the forces of unaccounted money/society dillution. There is no glimmer of sound currency without some scarcity behind it.
There is no worth of labored gains or store of value when there is no contents or rules to the medium of trade.
The markets are selling the real to cover up this fakery.
Unaccountable fiat always tends to destroy real curves of learned resourcefulness with easy comfort marketeeeeeering.
In very simplistic terms it could be summed up as this; Why bother when "bother" is cheaply given away.? Cheap has become our Ceaser, so, cheap we shall give back.
The fedgodz only purpose is to take care of the biggie bankerias first, hence that "look thee other way" mentality with Citi and BoA. The babelin' media heads are very much certain that if only enough liquid fiat nothingness can continually be injected, then all will be well, and infinite charades can inflatingly resume the proper derivements on thee said ongoing entitled enhancements....lolol. Sorry, It is quite a true sentiment though. (bullshit begetting more bullshit) I am not the least bit convinced. Sooner or later,(and sooner with depleting resouces) this great green fiat bean counter/grinder/blender/heli-chopper of ongoing somethings for nothings will indeed sputter itself into a long emergency Kunstler like puke. And as so far as increased globalization to the rescue goes....How do we get things to become more globalized with less available liquid energy mobility propelling it across the folded bounds with an increasingly worthless unbacked fiat medium of exchange?
All of the psychobabble fiat twisted and regurgitated Hegelian, Kant, Marxist, Keynesian economic logical triads won't change squat in this mammonized globalized world once the pilot lights begin to flicker. I really fear that we have become beyond complacent in our cheap easy indebtful creditized world to make real advances into replacement of this energy that allowed it. Yet I also believe we will change attitudes abruptly once the truth smacks us upside the alternative overmarketed head.
Long time reader of this fine thread, and me thinks 98% of thee entire governmental body of representitives could/should be replaced with the quality of thinkers from the drum :o)
So we should go back to the Gilded Age, when the entire gold-based economic system was so horribly rigged in favor of the rich that the bottom of the business cycle, then called "panics", would literally destroy the lives of the poor? So that cycle after cycle, a ratcheting effect put more and more wealth in the hands of the few?
You want to go back to the past because you expect to be one of the property-owning gangsters. If I were a poor renter in your tenement, your blessed deflation would cause my wages to collapse faster than my rent. Then your privatized coal companies would hike their prices in the winter, wiping out my savings. Then I would be in debtor's prison, no different than a privatized slave.
And then, sir, I would join a radical movement to blow your brains out. As millions of victims of hard-money capitalism did all over the world. Don't say "look at how bad that turned out" - they were STARVING right then, with no time for reasonable alternatives. Not that your predecessors ever came up with any besides moving West and murdering redskins to steal their land.
So don't bring back a past in which I would die or kill rather than endure. Isn't it interesting that with fiat currency or with a gold standard, the rich always find a way to get everything for themselves?
I should point out to both you and to RealMichigan that the past may not be relevant to the future. The nineteenth century was in a mode of exponential, FF-driven industrial growth. A stable money supply would actually be (and often was) deflationary in such circumstances. Of course, the gold supply was not always stable, as one gold rush after another would pump massive amounts of gold into the money supply. Thus, wild swings of inflation and deflation would occur. And yes, there were people ready to make the most of the opportunities that each swing presented, to the detriment of the more vulnerable members of society.
What we are facing in the future will be an inevitable, unavoidable, and unprecedented long-term economic decline, hopefully leveling off into a permanently sustainable zero-growth economy.
In a zero-growth sustainable economy, what you want is a stable money supply. Both inflation and deflation send misleading signals, and result in wrong economic decisions being made and resources being misallocated and wasted. In a zero-growth economy, nothing could be more harmful. Efficient use of resources becomes all-important, and a stable monetary value becomes essential to facilitate this.
In theory, I suppose that a gold standard could provide such a stable money supply. However, that assumes that we are all done with gold mining, and that none will be used up and lost. It also assumes that there are never any trade imbalances between any countries, and that there are no currency speculators. Those seem like big assumptions. It would seem to me that a better approach would be to simply fix the money supply at a specified amount and don't let it increase or decrease. This in turn would suggest that there would be little, if any, room for fractional reserve banking in a steady-state economy. Eliminate that, and a competently managed fiat currency would probably do the job just fine.
Sounds like a muslim economy.
For good reason, no doubt. They still have remnants of the stead-state economy of the ancient world.
The exception is that there can be and actually should be interest charged for money borrowed. In a steady-state, zero-growth economy, all assets must be used efficiently, and that means that all assets must have a rental value. That includes money. Interest is just the name we apply to the rent we charge for the use of money. If any asset has no rent charged for its use, then that asset is considered to be "free", and can be used or abused to one's heart's content. A zero-growth economy can't afford that, because it can't afford to replace assets that are wasted.
Muslim Banks do not engage in Usury. Sharia Law prohibits charging/paying interest. There is also an injunction against excessive risk taking. (probably as that would be considered gambling)
http://www.metimes.com/storyview.php?StoryID=20061129-083353-2138r
http://www.misysbanking.com/files/file5375_Islamic%20banking%20flyer%20P...
It is pretty much Don Sailorman position also. As an economy illiterate, I think this is an amazing statement by its simplicity and from an ethical standpoint.
Those nations that hold enough dollar reserves to cripple the US would likewise be crippled by such a move. China needs the US market to keep its population employed. Saudi Arabia needs protection now as much as they ever have. That's one reassuring angle on what is a scary subject. If the US sinks, the world will sink too.
It might be interesting to imagine what steps a foreign nation would take to insulate itself from a dollar crash, and then look if anyone is taking those steps.
Then why did the threat of dumping British pounds by the US in 1956 work? I'll tell you why - because the damage done to the US would have been minor in comparison to the damage we would have done to Britain and Britain knew this. Consequently they looked at the table and folded (withdrew from the Suez Canal).
If/when China can take less damage from dumping dollars than the US will take we have the same situation in reverse, with the US being the debt-ridden lackey waiting to be smacked around by a powerful creditor nation willing to risk short term economic pain to inflict their will upon us.
Learn from history or expect to repeat its mistakes.
"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone
GZ-
This is correct, however the import substitution model was in vogue then, or rather, globalization was not as ubiquitous as it is now. If China beggars the US vis-a-vis dollar collapse, it would only be as a last resort, because they would lose their biggest market. So it may happen, but if it does it will be when we are deep at war -the uncertainty of such a strategy ascertains its not something that can be 'tested' easily - its either status quo or all-in. All-in would be nasty beyond belief for the capitalist system
Nate: IMHO, you guys are both looking at this situation from a very USA-centric point of view, i.e. "China is threatening". China has supported the USA economy by buying up a lot of the T-bills. Now China is saying we won't be doing this indefinitely, especially now that you are talking of us taking a 40% haircut on the balance we are holding. Obviously China would like to gradually diversify away from the dollar- there seems to be an assumption in the US media that China should carry the US permanently.
BrianT, you're right. It's short-sighted to anger one of our biggest lenders. China has every reason to continue to only allow a slow appreciation of their currency with respect to the US dollar. By tying their currency to a falling dollar China's exports to the US and other countries won't be threatened. What does threaten China's exports is a lack of quality control resulting from resource depletion. One example, leather gloves from China. It used to be you could use them a few times, now not even once. They produce more and more and by necessity use poorer and poorer quality materials due to resource limitations.
I expect foreign holdings of US dollars will provide a floor for the US stock market, after all, if other foreigners refuse to accept them, where else can you spend them for anything of value?
Americans keep saying the rest of the world can't let US sink.
But the alternatives aren't really pretty for non-American nations either:
1) Pay off all USA's debt through inflation they export to us
2) Keep up the fallacious view of a unipolar world and the problems it brings
3) Destroy our own economies (due to high inflation, tightly coupled dependence to US)
4) Lose the last bits of our remaining economic sovereignty
Remember, US is only 20% of world consumption these days.
The "rest of the world" (remember the rest of 6+ billion of us?) might just barely swim without you - at least for a while.
Not that we want, but maybe the alternative is even worse for us?
This seems to be very difficult for Americans to understand.
Personally I find it really sad that leaders of the great USA are willing to make others pay their debt instead of taking care of their own mess.
And, I'm sorry to say this, the majority of citizens aren't much better either.
Otherwise all Americans would be campaigning against war (against Iraq, against coming Iran war, against militarization of USA), against selling mis-rated securities to Chinese/Japanese/Brits and any attempts at inflating the debt away.
But that's not happening, is it?
But then again, I'm a citizen of a very small country with a budget surplus and among EU's tightest fiscal policies (which went through a really bad depression and came back stronger than ever), so what do I know.
It's tough to be at the top and try to remain an empire forever.
The oil market has held up the exchange rate of the dollar artificially until now. How long will that last? The Euro is starting to replace the dollar in the drug trade also. Ultimately we have to wonder what activities will be available to the United States after the "market clears" on the dollar. The debt is supposedly backed by the "faith and good will (future productivity)" of the people of the country. Since most have become consumers, making money based on trading each other's debts to perform services, what value will be available from the U.S. to the world economy if the dollar tanks? Back to the basics: food production, mining, manufacturing, technology. How well we can compete with the rest of the world that we worked so hard to sell our technology and education to is yet to be seen. The biggest difference from a competition standpoint IMO is that everyone else is willing to live with less junk in their homes and feels secure enough in their politics to let the government manage their commons for them.
Only us United Statesians are dumb enough to buy the junk made in China and call it "value" simply because the price is low, while fighting tooth and nail against useful government along with the fight against too much government (losing both battles due to lack of focus).
"Always Low Prices" philosophy has given us cheap food, bankrupt family farms, worldwide ethical conflicts, McDonald's coffee, and expensive cupholders to put it in. Meanwhile, the government wants to keep our expensive health insurance system (nothing to do with health care), saying "it is not as expensive as you think". Not as expensive as, maybe, an SUV full of diamonds!! (credit to "Funny Times")
As Reverand Billy puts it: "Can We Shop Enough for Africa?"
If China pulls the plug on the dollar, their history shows they can deal with the loss of business from the US the same way they always have: the people go back to the land. Unfortunately for the U.S., the land has been covered with McMansions and people who don't know what land looks like. The transition will come, but it will be much harder for us than for them.
I suspect that the rest of the world might be safer living with a greatly reduced U. S. The transition would be difficult, but you might hope for calm afterwards.
Your government is probably much more responsive to the opinions of its citizen than is ours. In many European countries (and some in other parts of the world as well), if a few tends of thousands take to the streets in a noisy protest, those leading the government quake in their shoes and change their policies.
It isn't like that here in the USA. Here, even protests of a million people get only passing media attention, and are ignored by government leaders. Letters, editorials, petitions, strikes, pickets -- none of it makes any real difference at all.
Even voting makes no real difference. The only votes that really count are the dollar votes that go into the campaign chests or pockets of the politicians, and those mostly come from big corporate interests. Even those don't matter all that much, because differences between political candidates in the US are trivial; in most European countries they could all find a comfortable home in your major center-right parties. There is no truly left wing in the US political scene, and hardly even any true centrist position from a global perspective.
That's the reason why you don't see huge numbers of Americans protesting. Back in the 1960s, many people were still quite naive and idealistic; it was also a different country back then, and activism actually could make a difference, eventually. It is a different country now, and people know it; they are no longer naive, and they know that it truly is a waste of time and effort to protest. Even worse, we know that with the way things are going, today's protester could be redefined as tomorrow's "enemy combatant", rounded up, and never heard from again.
Check out a Matt Taibbi collumn on the Alternet archive about the changes in protets.
Protests were potent in the 60s because the Administration feared them. Since then they have learned to let them be. Let them protest and on Monday they will go back to their day jobs.
And you also have a war protest filled with PETA signs, Rainbow Warriors, Civil Rights protestors...etc...too fractured.
Taibbi paints a picture of 20,000 protesters, all wearing white T-shirts and blue jeans, completely silent, advocating one message, streaming by the White House.
In other words, show them we can organize and stay disciplined in order to be effective (could carry over into using this power to advocate boycotts as well).
Oh for shitz sake, our entire political body sucks from thee teat of unbacked fiat looking for the next unbacked easy play/handout. Placed power fiat positioning. Doners line up to advance the parade. The grand parade is built upon an age/stage of infinite resources, and, once upon a time that began to vanish, thus it's collective suggestive mediated entitlements reverted to ever more talked up wardumbery and placed thee terror restricting outlooks at every possible outlet without ever forwarding the true causes.... Somehow this contractual weans from asskissed interests,(unbacked fiat) and the populace buys into the whole collective flocking greenspun lie. Why? Because that is what happens to a fiat engineered society of servicing the fastrack blipped-up bleeps and charterized squigglies depicting more blips and bleeped contiUnation of the only betterment in the forseeable future. Thus, WHAT = MORE of the same nonsense....Why would the bullshit artists' of this perpetual nothingness kvetchingly demand and jeopardize anything other than their own cherry picked ongoing trained/placed parasitical authority? I certainly would nominate the highest ordered accomplice to the headfedfiatgod to promote all of my fakery extending my fakery... Basicly, all of that nonsensical digital dumbfoundness quantifies the preceding procesessions, reflects itself, and, ultimately accomplishes more exported useful productivity elsewhere (cheap labor) with replacement of worth reliance on ever more useless unbacked fiat in the homelands return. (Ongoing issuance of debt for cheaper labor, which is a grave fiat cause in itself) I imagine it portends and serves the waning daze of infinite unchecked charades of globalized fiat quite swell.
I expect we shall indeed see how long those blips and bleeps are represented on the said fiat turntable timescale without the real deciding factor behind their fakery of bullshitted infinium petrol-dollarium monetarization. A rather brief inconsequential belch in my estimation. And, I can say this very truthfully because I realize what is truly behind those mediated curtains.
Pushing the string is rather fun fiat economix, but unfortunately it all ends up in a wadded mess with grand elected finger pointers trying to extract the last voter vestiages from the fiat knot.
And as far as thee commy commanders of China swinging the newly induced fiated liberated consumerism populace back into the ag fields....Nada. People don't monetarily backtrack very well once the shoveled mammon of fiat is tasted and takes hold of crap consuming minds- (Example us) Thee ungrowth inconvenience is a rather large adjustment from a mindset of sky is the limit back to basemental dirt subsistence. Nope, takes years to swing it generationally....Thus it will take an eventuality of more escalated resource wars. Stupid is what stupid believes, and stupidity can be accelerated by the power of ten once the establishment of honest money and accountability has been removed from the system. What type of institution would promote such an obvious outcome is a better question.
Life is going to get interesting one way or another.
Talk is cheap. Have said me peace, and it is more than time for me to close down my keyboarded personal piehole and open up the eyes and ears.
Enjoy the calm silence in between the drum beats ;O)
Hi Nate,
Enjoy your comments but in this I think possibly you are looking at China through capitalist eyeglasses rather than socialist ones.
I think that population is the problem that China sees as it's greatest threat. If she plays patty cake with capitalists it will be only for as long as it is useful. Devaluing the dollar I think would put a strain on playing that game and it would, if that devaluation went very far, be time for China to change partners or the game itself. China is large and not to long ago was a world in itself.
wideblacksky "Saudi Arabia needs protection now as much as they ever have." Ainst whom other than the USA does Saudi Arabia need protection? Israel?
wideblacksky: "If the US sinks, the world will sink too." The only country that will sink along with the US is Canada. The USA is not the world, and the rest of the world doesn't really need it, and would probably be better off without it.
-
James Gervais
Hope was the last evil to escape Pandora's box.
Yeah, the world can shrug off the loss of nearly 30% of the global GDP with no problems!
I swear where you do come up with this crap?
But that 30% of global GDP was funded by other peoples money. Now you are upset that the creditors may wish to have their capital back. Remember - you get to keep the fancy toaster. They just want their money.
Why is that Americans have such difficulty understanding capitalism?
Since Americans appear to believe they are entitled to a non-negotiable lifestyle which involves consumption of the worlds resources and expecting the rest of the world to pay for this consumption it may be useful to look at the data.
In the above quote "sell your stock" refers to foreign creditors repudiation of the USD. Visit the URL and scroll around for some interesting graphs.
Everyone has different stats....
I will continue to rely on the figure (flawed or not) the global finance sector works with: around 8.5 trillion. The rest of you can have fun throwing around outlandish figures that have no real bearing on reality. 862 trillion dollars ring a bell to anyone???
Ridiculous!
PartyGuy,
Shrug off 30% GDP??? Sorry the cost of your GDP with the wars involved makes little business sense for the rest of the world. Pick up your pink slip. You're fired.
So you're saying that America isn't ripping off the world for a living?
All I see is hard-working non-whites saving their meager money, which their central banks and corporations lend to the US, where we get to spend as we please without any consequences - or any plan to pay off our creditors. Would any pre-Reagan conservative have called that just or sane?