patrick.net

One more point for you to think about if I may. There would also be an effect if our economy goes to pot. I believe that the rest of the world has benefitted from our illusionary prosperity. I would venture a speculation that there is a multiplier effect as our national value (things you describe: corporate stocks, the US dollar, equipment) drops. Like you said, a lot of that money finds its way back here in the form of investments which lose value as we become recessionary. Great article a couple of days ago about all the English investors losing money in FL condos.

My crystal ball says in 6 months we will officially be in recession with two consecutive periods of declining GNP. The latest figure is 1/3 of what was forecast putting us a .6%. That basically means our economy is stagnant.

Brand Says:
June 3rd, 2007 at 9:48 pm
"Oh, and how can they remain pegged, and still have such superheated economic growth relative to the rest of the world. Is it internally driven or what? "

It is externally driven by our Walmart model of using the currency difference as a way of getting cheap labor in relation to our currency value. They peg it because on the flip side of what you said earlier, lower currency value makes your goods more desireable for export because they are so cheap for someone to import.

Now, the free market is a very powerful force. As their workers who turn consumers gain more wealth and power, in theory they then want products of their own. So, do they buy from themselves or do they buy from us. We do have some things uniquely American, such as arts and entertainment, great tourism places to visit, and of course raw materials. China pays $200 a ton for cardboard and paper. It is only worth $50 a ton here.