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| reply to David
Re: Unemployment and Wall Street said by David:cause when the U.S. economy goes bankrupt and these companies lose out all together, only thing left will be gold. I don't think that's going to happen. Even though things look bad due to the injection of dollars into the economy, etc., the dollar's value is relative to other currencies. Even when it looked like our financial system was on the brink, foreign investors poured money into dollar-backed investments. The so-called "flight to safety." No matter how bad things get, the dollar is always viewed as a safe haven because it always looks worse elsewhere.
Right now, foreign governments (and their central banks) are facing the question of whether to raise interest rates to stem inflation, or keep them low (to devalue their currency against trading partners) to spur exports. Particularly exports to us. China pegged it's currency to the dollar again for exactly the purpose of protecting its export markets.
So, these things tend to have a stabilizing effect. Things go bad for us, and suddenly our exports look better. Trading partners devalue their currency to improve their export markets. Which causes foreign dollars to flood into the US, raising the value (due to demand) of the dollar.
I believe the far greater threat to the US is how our markets have been deregulated, and made less predictable. I don't mean predictable in the sense that investors are guaranteed a profit. But, predictable in the sense of a used-car dealer selling you a lemon because he has all the information, and you (the buyer) don't. (The reason we passed the "lemon law.").
The maturity of our markets (defined by absence of corruption, and an infrastructure to make corruption more visible) is what's made the US market (securities, commodities, banking, etc.) the best in the world, and caused investors to put their money here.
I think it's going to be bad if/when we become no better than third-world markets where corruption is rampant, and the system is "rigged" to benefit the top players. That's when we'll face collapse.
Mark |
