Is America going to collapse?

[DRSH1989]

For as long as I know people have always dealt with one form of crisis or another. I'm no American & I'm certainly not old enough to judge anyone, but as far as I'm concerned, no matter how much shit there is in this world (America or anywhere else), there is always room for improvement, if people with power weren't so stubborn & didn't have their own agendas... nothin' else I can say, except: I hope you find a good job with a decent work/wage ratio. (keyword: hope)

 

[Addendum_Forthcoming]

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.

Name one thing that the world will miss if America disappears? All the corporations will just move to other countries. We don't export jack.
I'm sure a lot of countries would be happy they don't have a giant douchbag nation lording over them with military threats.

EDIT: disregard this post. I don't want to go political. Stick to the OP topic.

I can give you one very good non-political reason:

The US. dollar is the economic standard.

When foreign companies make transactions, they convert most of those profits to the dollar. It's the standard that all other forms of money bend to. The American dollar is accepted in nearly all regions of the world as legal tender because of this. It's also for this reason that the US. Government can pump out so much money without having an adverse effect on its economy. Let me reiterate: most major companies - from ANY nationality - use and bank the dollar.

Now imagine what would happen if, say, the dollar's value went through the floor. If it became worth less than the paper it was printed on...

Hundreds of thousands of companies would be immediately shut down. The life savings of countless people would equal about bunk. The entirety of the world would be dragged into an economic depression of such magnitude it would make The Great Depression look like a day at the beach.

Hence why multiple countries are pursuing de-dollarization?

 

[Gabe Koszegi]

I don't know about that, there are lots of American Companies overseas that export resources back to America (Oil companies like Chevron in the Amazon). I had read something about meetings between countries in the EU talking about making the american dollar the worlds reserve currency, which would mean it would get printed like nobodies business and the value would drop like crazy.

Pretty sure your dollar is still worth more than ours up in Canada though, so that's good news.

 

[eezaak]

Go raid some rich peoples houses. Redistribute the wealth!

 

[crazypsyko666]

Honestly, we are the second Roman Empire. They got into too many wars, were overwhelmed in battles where conventional tactics were no longer relevant, had too many shitty leaders, too much corruption (just look at the teacher's union) and had far too much inflation.

That sounds a lot like where we Americans are headed. If it doesn't get better by the time I'm done with my college education, I'm probably going to try to move to another english speaking country. Preferably one with more relaxed drinking laws.

 

[Soods]

I think it will slowly lose its spot (if it hasn't already) as the most powerful country, but not collapse.

 

[CrazyMedic]

I very much so doubt that America is going to suffer anything along the lines of collapse, but it is very possible and likely right now that we are going to be surpassed as the worlds number one superpower by China or India. Oh and I empathise, I myself am trying to get a job right now, and none of my attempts are really panning out.

there is no way in hell china(I don't know about india) that china will ever permanently overtake the US(assuming something doesn't destroy us) see the chinese can barely make a good jacket there is no way in hell they will be able to overtake america permanently besides the fact they have little to no natural resources(That I know about), and there is no way they could produce better military hardware then the united states their tanks would breaking down every half a mile all they have going for is numbers. This just like the scare in the 80s about Japan taking over the world.

 

[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").