Jay, another excellent and thought-provoking post. Thanks.
While on the subject of fundamental economic drives, another [apart from testosterone-burdened males], is sung to the tune in Snow White and the 7 Dwarves as they marched off to the mine singing "Hi Ho! Hi Ho! It's off to work we go...". The modern version is "I owe! I owe! It's off to work I go...".
The USA has got onto this hugely powerful economic driving force. With life-expectancy now in the 80s, even for males [if they make it through their 50s], credit has created some great benefits for people. It's a kind of insurance policy and enables present consumption and benefits which add value throughout life. Insurance in the sense that if the debtor dies, it's bad luck for the creditor - or they might have an insurance policy to cover such an eventuality if a house is jointly owned. Borrowing to fund a house and paying it off over decades makes good sense. It's saves rent and all sorts of hassles. Borrowing is good, provided the legal framework protects creditors adequately, which the USA does.
Debt is energizing. The USA is full to the gills of this energy. They also have a lot of imported young XY types who are fueled by testosterone and Freudian urges. It's a political, military, economic, legal and social society the likes of which the planet has never seen, with communication channels swamping the world with their ideologies in a neo-colonial tsunami.
The USA can print a lot of dollars without inflation because demand for them continues to rise around the world. Argentina is now using them in place of their own currency - the risk premium on Argentine currency should have been high.
Americans will work into their old age to repay their loans. That is a good thing for GDP. Rich and lazy Japanese with huge savings [and lazy Kiwis who are like Japanese] will rest on the oars, call it a day, cut their expenditures because they don't need to spend as much as they did and don't feel like it anyway. That is bad for GDP.
Aztec metal is of course wealth, provided people continue to chant their mystical incantations over it. The day they decide it's undignified and making them look like hairy-backed knuckle-draggers, they'll abandon it. Imagine what the girls thought of guys who had trouble walking on two legs when chimp-style went out of fashion. Well, guys with gold chains around their necks are the new Neanderthals; an endangered species. Sure, they are doing okay at the moment [although the gold price trend for 20 years has reduced their lustre].
Another point while I think of it - I notice that I now have a stack of cash [in the form of US$ and Kiwi$] so I guess you have persuaded me more that a great recovery is not immediately around the corner and that the supersonic bargain-basement CDMA New Paradigm world will be there for a while. I am not leveraged, with debt on house and loaded up with stock at these levels. What people do reflects better what they believe than what they say. Too many people are doing things around the world which I consider untoward.
I'm a little nervous.
Mq |
