The Wealth of America

by J. Ron

It was 1945 and World War II just ended. America entered its golden age because it was the only country left that wasn’t ravaged by war. We were the only competition on the market. We were the only ones out there to provide the world for reconstruction. Now, some historians could say that the Soviets were also a piece of the competition, and it was, but to certain extend, America was left standing alone. Through the next decade or two, America found its way as a military power and rose up to be the wide spread power of the world.

But that was then. Today, the world, not just America, faces a globalization trend that could have consequences. The collapse of the Soviet Union allowed an open market with everyone around the world – nearly all countries had an open market economic system. China also opened its borders to foreign investors in the following years and big corporations like Wall-Mart have used Chinese labor, mainly because it’s cheaper, to produce our goods. When Americans look around, the smokestack factories are gone. America is not a producer nation anymore, it is a consumer nation.

Now what does that mean? A consuming nation is just a country that consumes and not saves. Ideally, when a household receives money either from the government or a job, they can either consume or save. Now this is not an ideal world, so just use your imagination what else money could be used for. Saving is also referred to as investment because when you put money in a savings account, you are investing that money and allowed interest to accumulate. America doesn’t save. Sure America seems to have savings accounts, but who owns the savings account and where’s the incentive to save the money when the system needs money to circulate? There isn’t any incentive. All the media does is promote consumption, and drone the minds of citizens to stop thinking so much. But in the next few years, America will change the consumption ways.

How can I accredit this? The falling dollar. To understand why the dollar falls, one must first understand that the trade deficit doesn’t mean anything about America’s wealth. America, or any country, has a current account and a capital account, both meaning different things. Due to the housing bubble, many of the bad loans bought by US investors, businessmen, and foreign investors are screwed over because the loans will not be paid. The capital account is the changes in the US assets with the rest of the world. Add two and two together and we get foreign investors of the dollar suddenly finding the dollar misleading because the trust in the dollar is disappearing due to the bad loans from the housing bubble. Remember, America is an open market economy. What happens here also affects what is happening in other parts of the world.

So when you’re hearing how bad the housing market is, you’re still not seeing the whole picture because no one seems to be adding how foreigners are also being screwed. However, when the American economy basically lives as a trading currency for other countries to invest in, (like I said before, America really isn’t producing anything anymore and the only thing keeping the US economy alive and spending is its currency and the oil – something I won’t get into here) then when the other countries suddenly decide the US currency is not worthy, the wealth of America will go down. It will fall as has a the road runner runs.

Look at the interesting articles today about the dollar falling down hard. It is only the beginning. Consumers will not be able to spend much and the dollar will still fall even farther. If the dollar can not be trusted anymore, which is already implemented by some foreign investors, and then our wealth as a nation will fall. How come I don’t feel the affects yet? You have. And I don’t mean the increasing price of oil, I mean the way Americans go travel to Europe and find that a cup of coffee is two to three times as more than coffee bought in America. China is keeping America under low costs, depending if we are viewing this from an American consumer’s side.

Bottom line is, America needs a good economic policy to trade with other countries, actually encouraged to because America can not withstand itself. Tax cuts will do more harm if anything, because of the open market economy. America needs other countries to stay alive and spending. Or some solution even better, stop consuming. If you take a look at how much you consume, it’s enormous. A village in India, probably around two thousand people living there, will spend as much as you, the consumer, spend in one lifetime. That’s crazy. You may say that I am out of my mind, or that I’m either republican or democratic, but this is totally conservative economic. Forget political parties, that has nothing to do with the issue. The issue is the average Americans not being able to buy the crap that they buy for cheap anymore. China and India will not with hold us for much longer, America will have to stop consuming more than its limits. But if you don’t take it from me, then go ahead and wait a year or two, the economist says it’s the end of next summer when America will feel the effects, possibly of a recession. Educate yourself and open your eyes to see the crisis America is in. Everything is pretty much predictable economically if you pay attention to the news, the real news that is.