posted on Jan, 20 2011 @ 10:58 AM
Yesterday I spoke with a financial researcher about the direction our country is going. I should add that this guy is a researcher, and not someone
who was trying to sell me anything. He is someone I know through my work.
First, he stated that he does see inflation coming into play, especially in commodities that are priced in dollars. He used oil as an example. The
recent increases in the price of oil are due mainly to the U.S. Treasurey printing more dollars. Supply and demand is affecting this a little, as
China uses more oil, but it is mainly due to the weak dollar. He does not foresee hyperinflation.
He also sees China beginning to have economic problems in the future due to its past restrictions on babies. Because Chinese were restricted to one
child, families wanted sons. This resulted in a disproportionate number of males to females. This will cause a declining birth rate. China also has
an aging society that will begin to drag on their economy.
Aging populations paired with reducing birth rates will drag on any economy. There is simply not the production going back into the economy to
sustain the aging. This will most likely result in civil unrest in China, also.
I asked about our debt approaching 100% of GDP. He stated this is problematic, but not a doomsday scenario. Japan has a debt to GDP ratio of nearly
200%. Obviously this is not desirable, but the U.S. is in a better position to deal with this than Japan. The U.S. has abundant natural resourses,
an increasing population, and plenty of land, all of which Japan does not have. Japan is also an aging society, with a low birth rate, a lack of
natural resources, is an island nation, and minimal immigration. This has caused them to remain in an extended recession.
A debt to GDP rate of 90 to 100% will drag on the U.S. economy at a rate of about 1% of GDP, just to service the debt.