Originally posted by TheBandit795
Then why are there so many dreadful predictions over the economy of the United States being made by
Well, since you ask, I will shed some light on this. Keep in mind that all those doomsayers have their own special interests that motivate them to
spread such nonsense.
From article in that thread:
Could the falling dollar mean we're in for a major financial disaster? Peter Schiff, CEO and chief global strategist of Euro Pacific Capital,
Europeans are scared of weak dollar because it means that USA will buy less of their goods, weakening their entire export-based economy (which is
falling at 0.3%).
"German Chancellor Gerhard Schroeder has suggested that the European Central Bank (ECB) should cut interest rates to reduce the strength of the
You can see why Europeans are worried, their economy is in shambles and US has less to spend on their products. You can bet they wouldn't complain if
situation was in their favor.
US is slowly rising interest rates as expected, this is nothing alarming and it may have an effect on boosting dollar.
Softer dollar is key for strengthening competitiveness at global market for US companies, while at the same time reducing trade deficit. This
especially matters when dealing with poor countries who are manufacturing extremely cheap priced products.
I suggest you don't believe these "experts" from left-wing media.
Microsoft's (news is from MSN) chairman Mr. Bill Gates unfortunately hopes that US will adopt European model of high regulations/trade protectionism
coupled with higher economic aid to poor countries that he is so concerned about, concluding from many comments he has made.
Truth is, free trade helps poor countries in a way that donations never can (they end up in politicians pockets usually), thanks to US investment
Chinese/Indian economies are rising at nearly 10% rate.
Now, on to debt/budget deficit issue. I will tell right away that US economy can handle twice or triple budget deficit of this one. Although it would
affect inflation somewhat, things would still function. Japan is 3 times as indebted as US and it hasn't collapsed neither I hear 'experts' running
around claiming world will end tomorrow.
This graphic displays US debt as a percentage of its entire economy, with US being the fastest growing developed country you can see that *growth*
alleviates debt over time making it a non-issue at a present time. Bush has pledged to decrease deficit about 50% to $250 billion in next 3 years,
which makes this issue even smaller. When growth is high, it means that govt. can reap more money for its budget, even if it introduces tax cuts
(which in fact encourage growth).
US doesn't put much barriers on import/export and this is why it remains amongst the most free economies in the world. Economic freedom always leads
to prosperity. If I want to buy Japanese car, and government imposes various tarriffs and restrictrions, then this is a major infringement of my
personal freedoms, and it has effect on depressing the entire economy since I have less wealth left for other things afterwards.
US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant,
to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the
barriers to entry of foreign firms in US markets.
US economic philosophy is somewhat different than the logic other countries are following, once you start to understand it you see why it's working
so well in comparison.