So as not to derail (lol) the “Downfall of the USA” thread, I thought I’d make an Economics debate thread. I’m not educated in economics so I’m interested in hearing alternate opinions, especially if they are based in fact. But please no one-sentence “this is my opinion, deal with it” posts. This is a discussion/debate thread, not a poll.
So, topic time.
Many people think the USA will collapse if our deficit isn’t eliminated instantaneously. What are the benefits of “austerity measures” to eliminate the debt? What are the downsides of (IMO the right solution) slowly eliminating the deficit over a decade through wealth tax increases and cutting wasteful federal spending?
What is the reasoning behind the statement “Don’t piss off China, they own 30% of our debt?” I read that if China stops buying debt, our currency becomes weaker and we gain an advantage in international trade - right now China has a huge advantage in international trade because their government is intentionally keeping their currency weak.
Nah bro, if you want a discussion about that youtube video then start another thread. Policy in this thread is to disregard all external links and youtube videos, except as evidence for points made within the thread. If one is unable to describe one’s views in one’s own words, one has no standing to debate them.
I’m not an expert in economy, but this sounds pretty stupid to me, I mean I think all the prices went up because of a huge increase in demand, and huge growth of the market, not because the evil federal reserve people decided to make the dollar cheap.
My logic is further proven by the fact that it’s still easier to survive today(depends where you live though) than it was back when the dollar was worth it’s weight in gold.
I’m not going to watch the video, but my two cents on the gold standard is this:
It’s impossible. No 1st World country will ever return to the gold standard, because when you’re on the gold standard, the most effective response to financial crises is to get off it. During the great depression, the countries which held onto gold the longest suffered most, and those who dropped it fastest suffered least.
If the global economy were to operate on gold standard, it’s guaranteed that eventually someone would “cheat” and drop gold at the first sign of economic trouble, and the whole system would collapse.
I didn’t watch the video, all the prices of what? If it’s general goods and services, which have been constantly getting more expensive, it seems like it probably is deflation caused by the fed/borrowing increasing the money supply.
This thread isn’t about videos, it’s about discussing ideas. If you’re unable to discuss ideas without using someone else’s literal video-recorded words, it wasn’t worth discussing in the first place. Besides, I pretty much guarantee that video is some illuminati conspiracy bullshit, the only way to stop the NWO is to buy gold, JEWS did 9/11, etc. By all means summarize the point if you think it’s interesting, but I’m going to assume it’s not until proven otherwise.
The one of the reasons why china has 30% (and growing) of American currency is because they have a fixed exchange rate, meaning they are collecting American currency, and because the exchange rate doesn’t fluctuate they are taking in more American currency then they are worth.
So yes, this is an issue, but we can’t do much about it because if China ditched the fixed exchange rate, their economy will most likely go into a recession.
Also, getting rid of the debt isn’t an issue it goes up and down over time, and will always exist, so people should forget about it.
Interesting post - surely China isn’t the only foreign country with a fixed dollar exchange rate? I remember reading something about “preferred trading” nations or something like that, basically all our allies. I’m still not entirely sure why it’s an issue… doesn’t the US have the ability to deny them a fixed rate if necessary?
The problem with fixed dollar exchange rates and the gold standard is that the cost of the currency doesn’t reflect its true value. Australia ran into this problem back in the 80s, when we were suffering from a staglfation recession, where we were suffering simultaneous bad growth and inflation. The reason? Because our currency sucked. Its price didn’t represent its true value, and everything was ridiculously inflated. When Hawke and Keating finally floated it, the value of the currency plummeted, but eventually got back on the path to recovery.
The reason the countries that suffered the most during the depression were those that tied their currency to the gold standard was because their currencies were overinflated, meaning that nobody wanted to buy their currencies because they had no real value, and the market cost of local goods was way off what they should have been. While floating the currency meant that everything lost value in the short-term, eventually everything regained value and we’re all sweet over here now.
Manageable debt is fine; the question is: At what point does the US’s debt become unmanageable, and the economy dies. The USA wont die if the debt isn’t eliminated overnight, but spending certainly does need to be cut so that more money can be pumped into reducing the level of debt.
First off, that means a winding down of the war. Its the US’s greatest (wasted) expenditure, and it needs to stop so that the trillions of dollars can stop.
haemorrhaging. Second, higher taxes. People will need to start paying more taxes so that the entire economy doesn’t die under the weight of all that debt. And thirdly, a lowering of expenditure. So that the budget can come close to balancing, and that debt repayments don’t get out of hand.
Keeping a currency weak means that its very cheap for people to buy your currency. Which is good for exporters and people selling to your country, but not importers and people buying from other countries, because the price of goods brought into the country goes up. The reason (I suppose) that China wants to keep the currency weak is because China is primarily an export economy, meaning that it wants to keep its goods as cheap as possible so it can gain an absolute advantage in the cheap labour market. As soon as their currency increases, their products become more expensive for other countries and they start looking elsewhere for their goods.
Quite separate to that is the issue of US debt. China has recently said that they wont hold their share of the US’s debt against them, and I’d say that’s probably right. Nobody wants to piss of China, but that’s completely separate from the question of debt; they’re the most powerful economy in the world (well, actually, Brazil’s economy is also growing at a similar rate, but who cares about South America), and its important to keep them onside at the best of times. I don’t think their debt holdings add anything particularly new to the international relations matrix, but that’s just my opinion.
Yep, and this is precisely why the “don’t piss off China” meme is so retarded. The global number one exporter nation isn’t going to do anything that’s going to harm the economy of the number one importer, it’s mutually assured destruction.
Fucking subscription only articles! But yeah, they like being on the winning side of our trade deficit and they aren’t going to do anything to change the dynamic.
The shitty thing is that other counties have kept fixed exchange rates, and it can’t last forever. It will lead to an economic collapse, and it is is just a matter of time. They are such an economic influence to the rest of the world, that any recession they go into, the rest of the world will also feel.
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