China!

Financial predictors, having failed totally at their jobs, now have a new focus for us to think about: China.

China is not something we need to worry about. They do not have the legal infrastructure to enforce contracts from one end of the country to another. How can you build an economy on that? And contracts are only reflective of a snapshot in time based on who is in power at the time the contract is signed. Try making major business decisions based on that.

And that is setting aside the problems with innovation and risk-taking that are not rewarded in the Chinese culture, which are still present.

The United States has nothing to worry about from China.

Foreign Perspectives on the Dollar

"They are getting rid of the dollar to,but slowly slowly.So in the end no one will pay you interests for the green paper,will get rid of it,and then you'll end up trillionaires: in worthless paper." Comment on Econo-Girl

At 9:12:00 AM, vader said...

"It is strange that no one in the usa dares to talk about this.To warn the people that HEY maybe in a few years your savings will worth nothing..."

Your ideas are interesting, but a little lacking.

Yes, other countries are conducting international business in Euro. Yes, some of that business used to be conducted in Dollars. But that is only part of what supports the value of the dollar.

The United States is an extremely stable country that is also a huge marketplace. We allow and encourage innovation like no other country, and don't place impediments in the way of instant success. You can get as rich as you want, as fast as you want, if you are smart enough.

Another factor supporting the value of the Dollar is that people all over the world NEED the dollar to have value. First, many non-Americans put their money in Dollars in the United States because they know it will be safe.

Second, you mention the exchange of goods and services in exchange for Dollars. Remember the end results of that exchange: we have their goods, they have the Dollars. If the bottom falls out of the value of the Dollar, it is the the trading partners who will be hit hard, not the U.S. After all, we are not holding those Dollars. China et. al. is. Even China's recent diversification won't change the billions in Dollar assets that make up their wealth. It is China at risk, not the U.S.

Third, the U.S. population has a horrible savings rate. To answer your question, what savings?