americian economy - how does it make sense?

[lostsoul]

i have 2 questions regarding amerika's economy.

1) how is it, that their in such bad debt(i heard it doubles every 10 years), and yet they are loaning money to many countries and still an economic super power.

2) Why is british money worth more then amerikian money?


if the answers are too complex..please help me out by letting me know where to look for the answer.

[von Mises]

1) Most of it is funded by treasury bills which anyone can buy. As long as they (mostly european pensionfunds etc) are willing to there is no problem. There will be in 20 years but then China is going to be the next power.

2) Too complex, there's no good anwer for that. One point of view is that British interest rates are higher.

Hope to be of some help

[atlanticche]

american economy makes no sense theres no point in trying to understand it

[lostsoul]

Quote: from atlanticche on 9:14 pm on May 11, 2003
american economy makes no sense theres no point in trying to understand it

i haven't studied economies as much as i should i guess. But every time i think of the americian economy is fucked, i mean..how can you loan people money if you yourself are in debt?

And how can the worlds most powerful nation have a smaller country(britian)'s money more valuable then theirs.

i doubt this is a good topic for the forum, so if i get no response i'll understand.

[The Muckraker]

The following is from this analysis (http://www.unobserver.com/layout5.php?id=795&blz=2).

"Imagine this: you are deep in debt but every day you write cheques for millions of dollars you don't have - another luxury car, a holiday home at the beach, the world trip of a lifetime.

"Your cheques should be worthless but they keep buying stuff because those cheques you write never reach the bank! You have an agreement with the owners of one thing everyone wants, call it petrol/gas, that they will accept only your cheques as payment. This means everyone must hoard your cheques so they can buy petrol/gas. Since they have to keep a stock of your cheques, they use them to buy other stuff too. You write a cheque to buy a TV, the TV shop owner swaps your cheque for petrol/gas, that seller buys some vegetables at the fruit shop, the fruiterer passes it on to buy bread, the baker buys some flour with it, and on it goes, round and round - but never back to the bank.

"You have a debt on your books, but so long as your cheque never reaches the bank, you don't have to pay. In effect, you have received your TV free.

"This is the position the USA has enjoyed for 30 years - it has been getting a free world trade ride for all that time. It has been receiving a huge subsidy from everyone else in the world. As its debt has been growing, it has printed more money (written more cheques) to keep trading. No wonder it is an economic powerhouse!"

Much of this was talked about because of the invasion of Iraq. I highly recommend reading the link above. If you want a deeper analysis, you might want to try this one (http://www.evworld.com/databases/storybuilder.cfm?storyid=490) as well.

The US is deathly afraid that the euro will become the currency for the oil trade and therefore the global reserve currency. That would spell doom for the US economy in the short term, and it would be a long road back.

That's only a partial answer to your first question, of course, but not a bad place to start.

[lostsoul]

thank you very very much. I will read those links.


but if my understanding is correct, then it means the Americian dollar is the main currency of the world? I was wondering how did it become like that? I mean every single country in the world would want that, if cuba got it, they would be superpower too. How did America get this? Was this because of its the most powerful capitalistic country, and the 5 of the major 7 oil companies are from america?

[Urban Rubble]

The bottom line is this, the American economy DOES work, it works for the corporate asshole that controls this country. It works great for the people in power, just not anyone else.

[Donut Master]

lostsoul, if you are a student, I suggest you take a course in economics. Most economics classes focus completely on capitalism, but that's what you want to understand, right?

[hazard]

the "economy" is a lie

all that truly matters in economy is the idea of OVERPRODUCTION. that is, capitalism functions under the principle of producing MORE than what it needs. recessrion and depression are all a result of this, and nothing else. every other "factor" and "trend" and "chart" are just used to disguise this truth. capitalism is a system that is a great wwaste of resources, life and time, which needs WASTE to pamper and protect the ruling class.

[lostsoul]

hazard -
i agree capitailism is very bad..but you have to also admit, that America has done some sneaky/smart things in order to get/remain on top. america is the richest nation in the world, and yet their only 3% of the population. as much as i dislike their policies, they are doing something smart inorder to be more powerful then nations whose numbers and natural resources double theirs.


Donut Master -
Yes i am a student, but my campus is deticated to only studying computers..nothing else. They have a few basic business and english class's but they are worhtless, i didn't learn anything in them..in fact i think i got stupider. The class is very very practical, they simply try to teach us business politics..etc...when i try to ask about the economy they don't know shit, and don't know where i can learn. I study alot at the university of toronto, and sometimes go into the class's and just listen..but i don't have time to do that very often anymore. I put it off for a long time, but i am thinking i should read Adam smiths "wealth" fully and i'll maybe get a better understanding. I have read summaries of it, but never the actuall book.

And thats my life story :-)


Take care everyone!

[Hegemonicretribution]

British money isn't really worth more. You an be paid £5 an hour and be well above minimum wage here. That same wage isn't too realistic in the US. All currency is the same, just different numbers I guess. It just has more to do with the cost of living.

[WUOrevolt]

american economy is the type that will never work. It is capitalist country where the capitalists rule and the only consideration is maximum profits for the capitalists