01/06/11 Baltimore, Maryland – Did we give you all our Predictions-Plus? You know, the things you OUGHT to believe, even if they are not guaranteed, sure-fire, absolutely, 100% in-the-bag.
Here’s another one:
The US Empire Has Peaked Out.
We don’t know if it is true or not. And in the last two centuries it was a mistake to bet against America.
But this is the 21st century. Things have changed.
Where is the world’s fastest train?
Where is the world’s tallest building?
Where is GDP growing fastest?
Where are most cars being made…and sold?
Who graduates the most engineers? Who pours the most cement? Who produces the most steel?
The fact is, if the word has an “est” on the end of it, it is probably not referring to the USA. Unless it is talking about debt. Of which, the US has the MOSTEST in the world.
What a change this is from a few years ago. Remember when the US was on top of the world…trying to get other nations to straighten up? Now, it’s America who is slouching…while the rest of the world wags its finger.
Here’s The Telegraph:
“We’re not going to allow our American friends to melt the dollar,” said Mr. Mantega, [Brazil’s finance minister] who views the US government’s move to pump $600bn (£387bn) into its economy as an unfair attempt to help exports.
“There are infinite measures that we can take. One of them is to manage the entry of speculative capital in the short-term.”
His comments came after Chile’s central bank announced a plan to buy $12bn (£7.7bn) of US dollars on international markets on Monday in an attempt to stem its own currency appreciation.
The Chilean peso has gained by more than 17pc cent against the US dollar since June, fuelled by increases in the price of copper, which is Chile’s biggest export.
It was Mr. Mantega who coined the term “currency war” last year as he voiced concerns that Brazilian exports were being damaged. In October he tripled the tax on foreign investments in some bonds to six per cent, a measure he said had since been “effective”.
Now, it’s the “banana republics” that are doing the responsible thing. They’re trying to protect themselves.
It’s the US Fed that has gone bananas – trying to print its way out of a debt deflation.
The emerging economies are growing fast – like the US in the 19th and early 20th centuries. In a few years, if this continues, they’ll overtake America as the biggest economies on the planet. Then, a few years later, they’ll have the most lethal military forces too.
Maybe it won’t happen. We don’t know. We can’t tell you what tomorrow’s newspapers will say, let alone those 10 or 20 years in the future.
But this is not an ordinary prediction. This is a “Prediction Plus.” You ought to believe it, even if it turns out not to be true.
Why?
Because there’s a downside to every upside…
Because every empire eventually declines…
Because the US is a high-cost, high tax, high debt economy, competing against cheaper economies less burdened by debts and taxes…
Because the US is full of zombies, people who produce nothing, while emerging markets are relatively zombie-free…
Because the US has enjoyed two centuries of success; failure is bound to await somewhere…
Because the US is broke…with a $200 trillion funding gap…
Because US labor claims to be “skilled”…but what kind of a skill is a degree in “communications” or “sociology”?
And because US assets are already fully priced – as if the US could expect to be the world’s hegemonic power forever.
Because…because…because…
Most importantly, investors still buy US bonds and the US dollar in a crisis. When the real crisis comes, they’ll wish they had bought something else.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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Well, no matter….
I was NEVER on Team U.S.A. (or equivalently, Team Canada – I live in Canada.)
No indeedy not! I am on team ME!
For the sake of free markets I hope you are on Team U and not Team U.S.A.
Why should we care if China gets a bigger economy then the U.S.? What really counts is per capita wealth and more to the point YOUR wealth.
Get in the game!
P.S.
I enjoy helping others get rich. But my real passion is ME getting rich by investing.
Wow, TIF.
You have an uncanny knack for completely missing the point.
Brazil finance minister echos much of the world.
They will not permit the US to melt the dollar. And they just might have the power to run part of US monetary policy. I am getting the feeling that a few countries ARE already running US monetary policy.
But, I AM the point…
I AM the Walrus
Goo goo g’joob.
I’m 72 years old and remember when I was in elementary school being taught that America was the best place in the world because we had more telephones per capita, more miles of paved roads, etc., etc.
Of course that was in the forties after almost all the world had been flattened by WW2. Nevertheless, the lesson was that it’s all about using up more stuff.
There were only about 135 million Americans then… and people even in the land of “morestuff” didn’t have/use as much stuff as even borderline poor people here do now.
Some things are better now. Gangsta rap has replaced Mozart for example. This mess is really going to slide into a bad end.
An America Lost in Squanderville
The United States’ trade gap is the proverbial “leak-in the-dike” with its de-simulative effect on our recovery. In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Media coverage that China has kept it currency undervalued is a gross understatement, it has actually been keeping the U.S. dollar over-valued; which adversely affects all our trade with all our trading partners, not just trade with China. Until action is taken on Buffett’s or a similar balanced trade model, by the powers that be, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
But we have Facebook. Isn’t this a productive capacity strong enought to propel us into the social network bubble? Soon taxi drivers going long again cause it’s different this time?