This one is for Dink and for any fear the Doomers might have been stirring in him. My fractal fettish has been working overdrive of late. ;-)
I don't want to say I am finally beginning to understand this stuff but it is at least starting to make a little more sense to me. In particular, I have been trying to understand some of this "stuff" as it relates to the dollar, etc... as all the talk on the blogs by Doomers and PEAK OILer had me wondering. Anyway, I though I would pass my thoughts along in case you were having similar troubles connecting some of the dots we read- these thoughts were stimulated by a series of posts by Krugman on Spain and the Euromess so hat tip Krugman.
First, I really recommend the following post from the American Enterprise Institute... FWIW, I am finding I really need to read BOTH left and right posts in order to get a three dimensional picture of these issues. Either by themselves seems entirely incomplete.
Anyway, after you do read this stuff, I recommend this and this.
... If you remember anything else, remember that the sum of the parts equals the whole (e.g. the conservation of energy).
Anyway, then look at this (you can click on the box to re-rank the countries by external debt as % GDP).
And of course, we all know by now that looking at debt in isolation is silly as Deb reminds us all the time that looking at anything in isolation is silly. Our debt is not a problem if we have the assets and ability to repay it, etc...
Bottom line, the US dollar will fall over time against some kind of theoretical standard (say gold), but it seems unlikely that it will fall either abruptly or catastrophically. Nor does it seem likely that America will go bankrupt as either a society or a government. This is true even if we continue our drunken sailor Keynsian spending. And if we spend this public money building nuclear power plants and/or drilling for domestic oil, we will push our problem a long way down the road (which has been Hell's point all along). It does seem forever clear that if and when the US government ever does go bankrupt, it will occur only AFTER ITS OWN CITIZENS have completely looted its assets. So even if they do this, and the American government goes bankrupt, the citizens will still have the underlying assets and American society will remain the same.
So I do not agree with Deb that our living standards will fall over time. In fact, I see the opposite. Though one could argue how they define living standards and using certain definitions I might concur.
Remember in any system, a certain amount of energy goes into it and a certain amounts leaves. Peak oilers may have a point re: peak oil but their hype re: PEAK OIL is simply epistomologically wrong so don't get fooled by their randomness.
Bottom Line: The future is not lost, though navigating its ups and downs remains the challenge it has always been.
PS- I do assume a certain degree of TRUST that the data on these links is accurate. I am increasingly learning such assumptions can be unwise. But we have to trust someone. ;-)
Total USA Debt
1 year ago