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Originally Posted by Phanuthier
As I understand it, its not that there was obscene trust in the USD, money was being piled into US TB's from the 401k's being stashed away as the lesser of 2 evils to the equity MF's - so its not trust in the dollar at all. Especially when the value of the dollar is so heavily dependent on the industries that were drowning, or did I get something wrong?
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How does that scenario explain the strength of the USA dollar, destroying all other currencies, including Canada's, through that time frame?
You're talking about Americans switching American dollar assets into a different American dollar asset.
The Japanese Yen, if I remember correctly, was also exceptionally strong in that time frame.
Essentially, for that to happen in both instances, you need strong net inflows of capital from outside of those countries, an abandonment of overseas currencies in favour of places considered safe.
And that's what happened.
Quote:
Originally Posted by CaptainCrunch
Its the $500 billion thats tough to handle. If you're going to cut you're going after the major rails of their government policy. Social Programs, or defense.
The U.S. military budget is at $664 billion, which sounds like a lot, but it represents 4.3% of their GNP. Now I get numbers anywhere from 664 to 948 so who knows, it looks like their biggest budget chunk is pensions at 900 billion.
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In roughly 2006, the year-over-year increase in federal government tax receipts in the USA was greater than the USA defence budget.
This is an enormous economy and the numbers can be intimidating and occasionally mind-boggling.
USA tax revenue dropped by about one-third through the recession, I think, but there is a ton of leverage to the upside as things normalize.
Still, few would argue that America is spending more than it should and that that the needs and desires of Baby Boomers continues to drive the agenda.
Nevertheless, the average American is saving about three times as much today as he/she was only a few years ago . . . . but still below the historic average.
On another topic, America's share of global manufacturing has remained fairly consistent through the last three decades while the average American worker continues to be enormously more productive than the average Chinese worker. The former may change in your lifetime but the latter is unlikely to change. America, if I remember right, still spends far and away more on research and development than any other nation.
The death of America is always an oversold notion.
Cowperson