Quote:
Originally Posted by Claeren
I think that is the wrong question.
It is not about it being on 'sound footing' by some standard that is not in place.
It is that there IS a standard (the dollar being reflective of the value of the economy relative to other economies) BUT that standard has been thrown out of wack for too long a period. Most obviously by China (mostly, but Dubai, India, Taiwan, Korea, Japan and others have played a part as well) providing unreasonably 'cheap money' for US consumers (and government) to borrow in order to fund further purchases of their own countries US-consumer oriented exports.
Throw in a low/negative savings rate, a housing bubble, massive social inequity, baby boomers looking to retirement, a lifestyle that is heavily energy dependent from the base up, and a less and less educated and dynamic workforce compared to the rest of the world and it is only a matter of time.
Claeren.
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So, I'll try to paraphrase: the value of the dollar reflects the strength of the economy (I agree). Predictions of a collapse are therefore based on the belief that the American economy is over-valued, with much of its heft coming from borrowed wealth?
Perhaps.
If I were to predict a collapse anywhere, it would be based on the imbalance in Western economies between economic output that's truly a "value-added" output, and output that's somewhat parasitic, adding no true value. How much of Canada's (or America's) economy is based on production vs. "services??"
Production--natural resource exploitation, food production, manufacturing, construction, and other similar areas make up a small part of these economies.
Services--retail, banking & finance, social services, entertainment, and similar sectors produce no tangible output, but compose the largest fraction of the economies.
It's an interesting balancing act. I can't say it's a "house of cards" as Looger recently did, but I can see how you would say it's ... fragile.