One of the things I loathe about leftists and Keynesians is the intellectual dishonesty they flagrantly display proclaiming their policies (which have failed in nearly every other country) works here in the US. While marginally true, it’s completely contingent on an incredibly lucky economic technicality – we have the world’s reserve currency. You take that away and the US would be no different than Greece, Japan, Spain, Portugal, or any other heavily indebted, non-producing nation.
Doesn’t matter. The USA has Obama, the brilliant inventor of Obamanomics, or as we like to call it, Trickle Up Poverty.
I would say that “nobody” knows what the US economy is worth. We can in theory keep printing money until that level in exceeded. We measure the economic indicators “every day” (MI+M*), but how good are other currencies? It is all relative
Shockingly, a strong foreign policy backed by a credible military is fairly important to USD remaining the world reserve currency. Such notions are naturally anathematic to progressive sensibilities, who are ultimately getting what they wanted, good and hard.. along with everyone else.
That foundation of stability and trust is looking more like a glass house every day. Eventually a BRIC could knock it down.
1. The greatest investment ever made was the investment made in the us military. The dollar isn’t a reserve currency without it.
2. A good friend of mine regularly uses the saying “you can’t fight the fed”. And that’s true. Until it isn’t. At some point the fed loses its clout – I think it would be sudden and catastrophic.
But with the rest of the world more unstable than the US it is hard to say when that will be. It could be a very long time and more mountains of debt yet.
And it’s a pain in the butt that us and e.g. the Aussies are getting screwed because the Euros and others are buying greenbacks because they think it’s the ‘safe’ currency.
Canadian dollar vs US going down. Vs euro, Brazil, rouble, yen going up. It all depends on the comparison.
Why the thought we are getting “screwed”? In the currency wars, lower is better. Swiss franc has appreciated too much and hurt their economy. There is a bottom but low dollar is an advantage for exports. Imports not at all but that is an advantage to canada as our dollars stay in Canada. A Canadian software company has received 20 % extra profit for doing nothing. Very little increased cost, extra profit.
Currency wars is a demonstration of global deflation. It is ongoing and accelerating. Not unlike the Great Depression (1930’3 not 2008) all countries devalued their currency to gain fleeting advantage in global trade.
When the USA imposed a 10% tariff on all imports to the USA a global crisis flirted with total collapse. Gold was abandoned as a means of trade settlement and central banks gained the power to create trade certificates. Gold fixed at $35/ounce was abandoned. It gave civil servants the ability to escalate debt which has escalated pretty much unchecked. Are circumstances that much different today than in the ’30’s. I think not.