Is America going to collapse?

[chinangel]

gee, I hope not! My boyfriend is American and I plan on moving there soon o.o

 

[hutchy27]

If America collapses, it is taking the whole world with it, and I do not think that anyone wants that. So, yes, I think we are going to survive, at least for a while longer.

Are you American by any chance?

 

[xDarc]

I always wondered if young kids knew what they were in for.

The reality is an hour's work in 1970 could buy 20 gallons of gas. Your predecessors needed less education to get better paying jobs adjusted for inflation, and also enjoyed lower costs of living.

Everything about the economy today is harder and faster. 40 years ago any lunk head could get a HS diploma and feed and shelter a family... now he's lucky if he can feed and shelter himself.

This is a result of globalization. There's too many god damn people in this world, in short. Too much demand, not enough supply, and your labor is getting cheaper all the time folks.

When's it gonna get better? After about 3 billion people die, say. The more of us there are, the lower our standards of living will be. Just thank your lucky stars you were born in a country where the standard used to be somewhat high...

Another thing is this recovery is bullshit. Granted I live in Detroit and we have the highest unemployment in the nation- but I used to play the stock market after the '08 crash; and things are drastically over-valued right now.

Credit is still tight, job numbers are only improving as people are dropping off of unemployment because they are maxed out, Obama was basically begging companies to start hiring again this month, walmart's sales are down- WalMart! January missed retail expectations as well. Fuel costs only going higher.

It is my feeling that the 4th quarter, holiday season, this year- will make or break our "recovery." So far, it's been nothing but smoke being blown up our ass.

I really don't give a shit if YOU are doing OK, there's people in detroit like that too. Detroit is in the county next door to what was, dunno if it still is, the 3rd wealthiest county in the nation. There are pockets of affluence everywhere, but it doesn't mean shit if things are continuing to crumble around you- because your time will come.

The US is sick, and this is not a normal 25 year business cycle in which recessions always happen.

 

[Lyx]

This all being speculation obviously, but I rather think the US would go down fighting. It became obvious to me a while ago that only two things here can happen: America goes to war with China, wins, and all is forgiven, or America goes to war with China, loses, and America as a whole ceases to exist. But I'm pretty sure both sides have big ass missiles, so we could end up taking each other out.

The point being that it would be impossible to call in that debt. It can't be paid off.

I've pondered that question too for a few years. After a while, i noticed that i was looking at the situation from the wrong angle: It isn't even necessary to call in that debt, to trigger a currency reboot.

Case in point: The current US bond-market. The USA can only sustain it's spending spree, by either other govs buying up US-bonds, or by the gov itself buying its own debt. Confused about the second option? Well, it goes like this: The gov issues debt/bonds. Then the fed prints money with which these bonds are bought. Still confused? Okay, here's the shortest desc: If no own borrows the US cash anymore, then the US just prints the dollars it needs for spending.

At this point, a short reminder on what fiat currency is: Fiat money value is trust in the issuer of the money. It has a value, because people believe that it has that value. To put it really simple: The dollar is worth as much as A) There are dollars, and B) as people, corps and other govs trust the US in how it handles money.

So, how reliable and trustworthy would you rate a currency issuer, that acts as if it's own money doesn't apply to itself, by just printing whatever it needs? An issuer that apparently has no mid-term exit strategy out of its massive deficit spending? How would you rate some guy who is overindebted, broke, yet still buying hookers and icecream en masse, and who then proposes that you trust the money which that guy issues?

If you were quite dependent on that maniac, and would have a big stake in his currency, you'd of course not want to immediatelly let all this stuff go down the toilet. However, you would want to carefully get out of business with this financial black hole. And that is exactly what has been happening on the markets recently: REAL investment in US bonds (investment not by the fed itself) slowed down (who wants those shitty 2,5% interest rates anyways? US bonds are so unattractive and toxic now, that the only one who would really want them, is the US itself). Investment in other stuff, especially precious metals, booms.

So, "the world" is already retreating from the dollar. It may not be an outright panic, because a panic isn't desired at this point. But what if something goes wrong with this careful retreat? What if in such an explosive situation, some critical event happens, and the retreat escalates? Then the dollar will go down the toilet... and it will have happened without that debt having been called in - rather, people would just have decided "The dollar sucks".

 

[hutchy27]

What do you think? Are we going to survive or should I start speaking Indian/Chinese?

Well it's always nice to have a second language I'm currently learning French and then going to learn Japanese.

 

[xDarc]

Snip

Currency and dumping of the dollar is a huge issue as well.

One thing the US does have a fuck-load of though is military hardware. I think there's a big war coming, not another little skirmish, like ones we've been having since the late 70's.

 

[Andothul]

After the Baby Boomers finish retiring and die the US and the world will be a much better place

 

[Manji187]

Because I'm getting worried. I can't find a job anywhere, I'm trying my best. Gas prices are going so insanely high my parents are having a hard time getting to work in the morning, and I know there are family way worse off than mine. I heard prices are going to be $5.00 later this year.

How much longer can this last? I want to finish college and get a career but I fear there won't even be a job market when I get out. I have this overwhelming sense of doom crushing down on me. (Mind you I do live with a dad that is the biggest prophet of doom you've ever seen.)
I know history is full of depressions, but the world is a much different place, population growth no longer bolsters an economy like it did back in the day.
What do you think? Are we going to survive or should I start speaking Indian/Chinese?

Shouldn't you be worried more about internal tensions like the Tea Party Movement? And the rising socio-economic inequality...

If America is going to collapse...there's a chance it will happen from within.

 

[Danny Ocean]

"The national debt is large, but that can be cleared with time."

Query: How?

A combination of re-newing bonds on longer/lower interest contracts, reducing spending, and increasing taxation. The USA is still AAA, so people will still lend to it. Basically, you borrow now while borrowing is cheap, on fixed-interest contracts, to pay it all off when the boom begins again.

Or

Increase spending, decrease taxation, and hope that that provides enough of an economic stimulus to get the GDP growing again and you can use that growth to pay off the debt.

Given enough time the economy will may to recover again as firms re-stock. Investment will increase and so on. This will increase GDP eventually anyway. The stimulus packages helped with this. That kick start will provide the growth needed to pay off the debt.

Depending on your economic point of view. It' probably best a mix of all of the above.

 

[Lyx]

A combination of re-newing bonds on longer/lower interest contracts, reducing spending, and increasing taxation. The USA is still AAA, so people will still lend to it. Basically, you borrow now while borrowing is cheap, on fixed-interest contracts, to pay it all off when the boom begins again.

So, all financial government decisions would need to be optimal for a long time-period, and during that period, no critical events may set off the bubble.

Not impossible..........

 

[Danny Ocean]

A combination of re-newing bonds on longer/lower interest contracts, reducing spending, and increasing taxation. The USA is still AAA, so people will still lend to it. Basically, you borrow now while borrowing is cheap, on fixed-interest contracts, to pay it all off when the boom begins again.

So, all financial government decisions would need to be optimal for a long time-period, and during that period, no critical events may set off the bubble.

Not impossible..........

When it comes to reducing national debt, you need to reduce the difference between government spending and taxation.

You can cut spending, and leave taxation the same.

You can raise taxes, and leave spending the same.

Cutting taxes and cutting spending by the same proportion won't have any impact.

Both of these will decrease aggregate demand, which wouldn't be such a good idea in a time of a recovery dependent on aggregate demand.

OR you can keep taxation and spending the same, and renew your government bonds. This won't directly harm the economy (unless the USA gets downgraded), but it will increase the deficit. Renewing them now will make them cheaper, as interest rates are low.

The hope of the last option is that your economy will take off again, and you use the resulting increase in output to close the budget deficit.

Printing money helps by reducing the proportion of the fixed-rate national debt in relation to the amount of money you're bringing in. This reduces the value of the currency which makes it harder for the US to buy imports, but also makes it easier for everyone else to buy US exports. Need to be careful with this one- too much of it can lead to inflation.

 

[ultimateownage]

Maybe, just maybe, America could- I don't know- solve their problems?

 

[Lyx]

A combination of re-newing bonds on longer/lower interest contracts, reducing spending, and increasing taxation. The USA is still AAA, so people will still lend to it. Basically, you borrow now while borrowing is cheap, on fixed-interest contracts, to pay it all off when the boom begins again.

So, all financial government decisions would need to be optimal for a long time-period, and during that period, no critical events may set off the bubble.

Not impossible..........

When it comes to reducing national debt, you need to reduce the difference between government spending and taxation.

You can cut spending, and leave taxation the same.

You can raise taxes, and leave spending the same.

Cutting taxes and cutting spending by the same proportion won't have any impact.

Both of these will decrease aggregate demand, which wouldn't be such a good idea in a time of a recovery dependent on aggregate demand.

OR you can keep taxation and spending the same, and renew your government bonds. This won't directly harm the economy (unless the USA gets downgraded), but it will increase the deficit. Renewing them now will make them cheaper, as interest rates are low.

The hope of the last option is that your economy will take off again, and you use the resulting increase in output to close the budget deficit.

Well, i don't subscribe to the popular doctrine of artificially blowing up the economy. If an economy cannot sustain itself, then what it needs is not more cash to burn, but instead fixing of its defects.

I in my past reply wrote "not impossible.........." - what i didn't speak out was "just very unprobable".

If you look at the recent history of the USA, it is unambigiously clear, that it is very motivated to blow up the economy, while not very motivated and disciplined at running a real budget surplus, by reducing gov spending (which does not in all cases need to involve axing of features - there is such a thing as efficiency of gov services, and govs rarely make use of that), and increasing taxation. The USA shows no signs at all of making massive changes to the spend/tax balance. In fact, spending is quickly INCREASING, not decreasing.

Or in short: The US' plan to fix their budget problem, is the idea that if the budget is just negative enough, it will someway become positive (via an endless series of "stimulus" packages, which is just a nice sounding description for "printing and giving away free money").

 

[SNIPERFOX ft. Harry P.Ness]

don't. know really. I find it funny that America was fighting communism for 50 years, and now is being bailed out by communists!

 

[geier]

You think your gas prizes are high ?
Here in germany 1 litre super costs from 1.54 to 1.59 Euro, that would be 5.83 to 6.02 Euro/gallon and that would be 8.01 to 8.27 USD/gallon.

How about you dump that crappy american car and buy a fuelefficent one, like a german or japanese ?

Oh, by the way, here a proof of german gas prizes:
http://benzinpreis.de/statistik.phtml

 

[Lyx]

German gas-prices are so high, because they are strongly taxed. Maybe you should have mentioned that.

 

[Pontus Hashis]

What do you think? Are we going to survive or should I start speaking INDIAN/Chinese?

I think I might see a reason why you can't find a job... There's no Indian language, there's many languages in india. Read a book...

 

[Flav.F]

You're going to see a lot of chest thumping "USA USA USA, WE R NO.1" crap in this thread.
To be as frank as I can a collapse is extremly unlikely, but a demise isn't.
The main problem being this;

There are two field in which the United States can make money

1) Agriculture

2) Science

However, it will be beaten in Agriculture by China,India,Russia and Brazil by the simple fact that people in those countries are willing to work longer hours for a smaller pay.

So logically the U.S. would need to invest heavily in Science, but itonically it isn't.
Well, Obama seems to have caught on to this and is trying to boost science funding but the republicans are telling him to go fuck himself.


The ammount of creationists, and anti- evolution hype in the U.S.A. is apaplling. If nothing is done about your country's relationship with science, it will ultimatly stagnate and start to loose economic power and scientific credibility.


It's important to note that the U.S.A. become a superpower by investing heavily in science in the first place.

The Us will not be beaten in agriculture by China in the short term, the arable land difference is slanted far in the Us's favor and quite a bit of that science thing you are refering to goes to making crops grow even faster then they already do.

edit: the us prefers science with the application of killing other people so their could be a lot of stuff you just don't know about yet hey that 700 billion $ defense money has to be going somewhere.

http://upload.wikimedia.org/wikipedia/commons/8/85/Arable_land_percent_world.png


That map shows the percentage of arable land in each country.
As you can see, China's arable land percentage is just below yours, and India's surpasses that of the U.S. by far. Both countries are beginning to invest heavily in science. Which means it's only a matter of time until China and India have are able to pose a serious threat to U.S. agriculture.

As for the U.S.' investment in the arms industry. I suppose it likely going to keep the U.S. ' economy up but it's the same thing as before with China, India, Russia and Brazil all on their way to become world superpowers those countries might pose a threat to the U.S. arms industry as well. Especially China, China has no ethical boundaries they don't really care how devastating the weapons they make are, or who they sell them to.

Ultimately the U.S. should invest in making technological and scientific advancements, seeing as it still is the scientific powerhouse at the moment, but Europe seems very willing and able to take that title away from the U.S.

 

[Azrael the Cat]

(a)In terms of world empires, the US empire wasn't/isn't much more than a pebble compared the British empire (and don't start going on about the 'war' of independence - that just made US economically unprofitable for exploitation, it was a loss in the same way that the US 'lost' the Vietnam war - the Brits could have steamrolled the US just like the US could have nuked Vietnam (or just razed it to the ground), but blowback and vulnerabilities from other genuine world competitors at that time made it unviable. The US empire isn't even really as powerful as the Spanish empire at its absolute height. The world survived those, and with China and the former 3rd world lifting their production the US collapse will be barely a speedbump.

(b) You want to know just how much the US economic collapse means to the rest of us. In Australia we've had a boom throughout your entire recession. Despite having state-run universal healthcare and all those goodies that you call either 'socialist' or unaffordable - even having those didn't stop us from being utterly unaffected by your economic self-implosion. Oh, and our debt is around 3% of GDP (and we freak about that - your debt, from memory is around 60% or more of your GDP...), if you want an idea of how little a relationship there is between large gov't (or medium gov't in our case) and debt.

(c) The US isn't going backwards so much as it is missing out on an increasing proportion of what the developed world takes for granted. Universal healthcare is the popular example at the moment, but in most first-world countries there's programs - funded - to pay for retraining and even relocation. Sure, students might have rental difficulties if they're doing a course with long hours that prevents them from working part-time, as the gov't allowance is a little bit low, but to actually have to PAY for classes would be unthinkable. It would just be crazy - the economy benefits from having people in work, so why would you place economic barriers in the way of economic fluidity? And these aren't countries that are socialist - it's just standard first-world practice. Your popular perspective of what is economically 'socialist' is skewed in a way unique to the US alone.

For most of the last 50 years, the US had among the highest production/person but always had a problem with distribution in that the average person had such a low share that the standard of living was worse than for poorer countries. But now countries like Australia are actually richer than you guys in terms of production per person (yes, 'per person', OBVIOUSLY), AND your distribution problem has become worse than ever.

It seems that you've got yourselves to the point that you've reduced your taxes below the level needed to maintain a functioning state, and that the US is no longer able to paper over the gaps in its infrastructure - and by that, I mean economic infrastructure - readily available and effective higher education and vocational training, if there's jobs available in engineering and there's an unemployed truck driver that has the brains and the ability to be a good engineer, then the economy needs to provide a path to get that guy trained and into the engineering job where he can actually contribute. If your society is so stratified that solid chunks of the population just can't access the means of economic progression, or can't change sectors when technology makes old ones obsolete, then sooner or later things are going to implode.

Over here, and everywhere in the world that I've travelled (which is pretty much everywhere except south america), it's taken for granted that this is what is happening to the US. In the main conservative newspaper over here, The Australian, the economists/forecasters taking the most OPTIMISTIC view (for the US that is) are saying 'don't worry, the US will remain a dominant power for WAY longer than people think - they won't lose power until around 2050-2060'. 2050-2060 is the outside estimate for the longest that we expect you to remain dominant. That's the optimistic best case scenario for which other countries are preparing. And it seems that you guys are hell-bent on speeding that up cutting your infrastructure even further and refusing to even contemplate addressing your debt by raising more revenue (taking a realist position that you've probably snookered yourself militarily into a position where you can't actually get a significant withdrawal for some time now).

You wouldn't even necessarily have to raise the taxes for the average person that much. The GST - a consumption tax on all goods and services - was considered ultra-right-wing when it was introduced by our conservatives over here, but for you guys it would actually be a more progressive system than what you have - you could increase your revenue considerably without raising taxes overall for the average person. And at least it provides a secure tax base that can't be avoided through creative accounting. Heck, I'm not saying that that's your magic answer, or even that it would necessarily be a good idea, but you've got no chance, zero chance at all, unless you find a way to fund infrastructure and economic/social fluidity.