“The other issues in the global picture are the economies around the world, and the diametric issues facing those. None, however, suggest the ‘American dollar and economy are at a dangerous point in history.’”
So, the economic issues in Asia and Europe are affective, no doubt, but, as I said above, in no way do they represent a danger of a magnitude that reflect what the reader said he has seen on many a financial website. In fact, I would take this in the opposite direction and say that the other economies around the world, despite their current economic issues represent potential growth and expansion for both the U.S. economy and the U.S. dollar. Yes, China, India, and Europe will continue to remain as strong trading partners for the U.S., but other countries represent potentially strong trading partners down the line.
Brazil, and the developing economies of Central and South America are emerging markets that represent zero threat and potentially huge benefits. Culturally, we are much closer to these countries than we are to China or India, and one should not underestimate that in relation to trade. Certainly one can see this “rapport” in our trade relations with Europe. The dying of strong leftist politics in Central and South America will also benefit our economic relationship in the future.
Something else to note is that unlike Europe, China, and India, the countries in our hemisphere are so structurally deficient that they are building their infrastructure with the technology of today, whereas Europe, China, and India are backtracking and replacing 19th century technology with 21st century technology, just as we are here in the USA. Thus, the countries in our own backyard will economically evolve much faster than one might think, currently. Brazil is an excellent example.
A quick note about the emerging economies of Eastern Europe – they are in no way a threat to the U.S. economy or the U.S. dollar. Their emergence from the yoke of communism is producing quasi-capitalist economies that will create huge middle classes filled with consumers who love and want American products. Enough said.
Now, we come to the real danger to America and its economic way of life. As I have pointed out, that danger exists in the near term relative to the politics of our elected officials. Yes, the U.S. economy and the U.S. dollar could crash hard here if they do not get their act together, but I suspect they will, and life will go on.
I fear, however, that the real, longer-term historical danger to the U.S. economy and the U.S. dollar is not the debt and deficit – it is the price we will pay to satisfy the ideologues in the process of resolving the deficit and debt issues. Thus, it is this that makes me agree with those out there who tell us the “American dollar and economy are at a dangerous point in history.” Tomorrow, I will tell you what the real historical danger is to the U.S. economy and the U.S. dollar.
Trade in the day – Invest in your life …
