<I have been seeing the US of A spreadeagled over the ROW like the Wile E Coyote over the Arizona desert, and Ive been seeing it this way for such a long time, that I have now a problem with gravity (I know, it sucks, but that's exactly the point). What's your take on a) account balance b) deficit spending c) the savings rate ... etc - you know the usual suspects. >
At some stage, within about 30 years, all state fiat currencies go to zero. What happens between?
There are simply astounding processes under way. The biggies are 1.3 billion Chinese and 1 billion Indians [population growing quickly] going from near zero incomes [thanks to their stupid state controls] to somewhere away from zero and likely towards the global average.
With pay rates in US$ hugely below US and Euro rates, they have got a vast gap to fill, provided they don't blow it with war, pestilence etc.
That many people will need a LOT of money in their bank accounts. So, pixelation processes can proceed apace and inflation won't gain ground until they are all on the production line. This is great fun for the pixelators. Everyone wins [other than those who lose business to the low-priced competitors, and good riddance to them - they can get real jobs at what the market will bear; I don't owe them a living].
I don't understand the processes fully, but I think they mean Wile E Al KBE can pixelate away for years to come [with Bernanke keeping it up] and King George II can spend said pixelations on the War on Terror and other hobby horses.
China can pixelate even more because they have got a LOT of things they can spend money on and LOTS of people to work and no risk of inflation to speak of until they run out of one or other of the needed resources [human, oil, coal, steel, cement, etc].
Because the value of what they produce is so high compared with the input costs, they can pay $50 a barrel for oil and lots for steel and cement to build apartments and factories and roads and airports and dams and be well ahead of the game. A washing machine has some steel in it, but it is so much better than scrubbing in a creek that the cost of steel is irrelevant if it frees somebody to man the CDMA factory, which produces extremely useful things with very low costs and almost no materials].
I want to see a billion Chinese and a billion Indians with GDP per capita 10 times that of the current USA level. Okay, that's wishful thinking, but at least matching would be nice. Wile E Al can remain suspended for a longgg time before that happy circumstance is achieved.
People misunderstand that to mean that 2 billion Indians and Chinese would be each using as much oil as Americans do now, and then conclude that because that can't happen, the GDP goal can't be reached. But GDP isn't made of oil. Look at the maglev track in Shanghai for example - no oil need be used. Concrete, steel, plastics and electronics can do the trick. Imagine maglevs by the 10,000 km, electronically controlled. No need to even drive a vehicle. More importantly, check out the oil used in cyberspace and service industries - almost none. Insulation is as good as heating.
Mqurice |
