I figure we'll have to start handing over land at some point to satisfy our creditors.... (ie: Alaska) The history buffs, will remember that during WWII Germany started printing currency to make up for war spending.. which rapidly made the Deutschemark almost worthless. And once upon a time, a $20 dollar gold coin (~1 oz) was worth $20 USD, now you would need 60 twenty dollar bills to get a gold coin of the same weight.
"Deficits don't matter." Dick Chenney Citizens who got in a habit of measuring their "wealth" by how much they could borrow were hard to convince that borrowing more to make payments on debt already acquired would have an end point- with unknown consequences for them, and their government. One of the consequences of U.S. Government borrowing, rather than taxing, to cover budget shortfalls, has been that no one has had to do any serious thinking about reducing government expenditures. Everybody has been able to have what they wanted, whether it was spending for weapons, or spending for health care. Costly new programs have been added to what was being borrowed- most recently, the Medicare Prescription Drug Benefit- with almost no one saying plainly in response to the proposals, "Has anybody noticed, there is no money?!" ____________________ The problem is, even those citizens who may have exercised personal restraint, or perhaps even done without some things to save through the years, will get caught up and suffer right along with everyone else, should a general collapse come as a result of general imprudence.
"The Great Recession" Not exactly on point, but interesting, nevertheless, is an article appearing online, from the Atlantic Magazine, titled, "How a New Jobless Era Will Transform America". Primarily a sociological piece, it makes interesting reading and, for those of a somewhat pessimistic bent with regard to the trajectory the U.S. is on, will offer reinforcement.
Correction Well, the DOW did make it below 10,000, briefly, during this period of uncertainty in the markets. The pullback did not quite reach the ten percent mark that is considered a "correction", but it got close enough for investors to feel more comfortable, and for the markets to stabilize; helping, were the bailout of Greece, tougher talk about the budget deficit in the U.S., and a slight bump up in short term interest rates charged by the Federal Reserve. This was the first "correction" to have occurred since the markets began to recover in about March, last year. People want to invest; many have money to invest. I think the natural trend, after the collapse of 2008, is an upward trajectory for the markets; but, people are nervous, and more ready to take their money off the table than ever before.
Not so fast on the alleged "bailout" of Greece. No money has been sent and Germany is having real second thoughts about putting money into a nation who's debt will approach 120 percent of its GDP in the upcoming year. This bailout could very rapidly turn to doodoo. Germany Faces Ratings Dilemma in Greek Bailout, Schroders Says - BusinessWeek
Not to rub it in, but that statement could easily apply to the US right now. 2009 GDP 14.26 trillion National Debt 12.4 trillion (and counting)
Influence of a "poor" nation Much of the U.S.' influence in the world has been predicated on it's wealth, and what it could do with that wealth. This also explains China's incipient influence in the world, as it continues to amass wealth at a rapid rate, with its economy doubling in size every seven years. The U.S. government has been borrowing large sums abroad, and "cooking the books" in a variety of ways, for a number of years, to avoid having to collect taxes from a nation reluctant to pay more. This very process has been advocated by a number of ideologues who saw this as a good thing, and characterized it as "starving the beast". Now that the beast has been starved and U.S. reduced to the status of "debtor nation", unable to fund current obligations- including the obligation to pay interest and principal, when due, on money already borrowed and spent, without borrowing or printing additional money- it should not take long to see signs of diminishing influence in political and economic spheres, externally, as well as a considerably reduced capacity to solve its own problems, internally.
It will be interesting to see how soon immigrants get the message and stop emigrating to the US. I wonder if China is an emigration destination, or if it will become one?
The history of the human race is a history of migration. Which way population flows go is mainly a matter of perceived advantage. Both the U.S. and China represent perceived advantage to some groups of people. The U.S. will continue to be more attractive to a wider swath of humanity. I don't know if you'd find it surprising, Rivergirl, but a great many Americans have gone to China to live and work, in recent years: they don't typically immigrate, but some do, having married and put down roots there. Interest in going there has increased since the great recession began in 2008. China is not a particularly difficult place for Americans to live, though the language is sufficiently difficult to learn. As a very large and diverse country, with a history and culture very different from our own, it can be extremely interesting to see, and experience. Unrelated to recent economic events is the numbers of young Americans studying Chinese over the last 15 years, many of them imagining a future career path that will require knowledge of the language. Even more young people from different countries are in China, studying the language, with much the same intention and plans. To encourage other young Americans to come live and work there, the Chinese Government has offered special inducements, including an offer of easily obtained, permanent residency, to second generation Chinese-American citizens, many of whom speak Chinese with a near native quality, and bear with them their U.S. acquired education. Evidence of the burgeoning wealth of China is the currently underway project to build a network of 42 high speed rail lines, to be completed by 2012, at a cost of $100,000,000,000.00 USD, none of which they had to borrow. The system will include 5,000 miles of high speed passenger rail lines, and 3,000 miles of high-speed, combined passenger-freight lines. The passenger train lines are designed for 350 KPH speeds. One such line, already in service, and a part of this project, involves a 1068 KM journey which takes just a little over three hours, station to station, and runs over 600 bridges and through 200 tunnels in route (necessary because of the HST's inability to negotiate curves, owing to the speed).
