Americans have been very fortunate to live in the greatest growth economy in the 20th century and they don't have to worry about the value of their savings or the equity of their homes. They never worry about what their wages and earnings can and will buy next week or month. That's mostly due to USD being the strongest currency. That's also the reason for little savings and count on retirement benefits or social security.
In most other countries, this is not the case. As they are growing up, they are being taught how to preserve the value of their bank accounts. They have experienced the sudden loss of wealth when the local currency gets devalued overnight. Those sensible enough have multiple international bank accounts, say in Singapore, US, HongKong, Japan, Germany, etc., or in gold bullions and the 24 karat kind for preserving capital. Most Americans don't have to worry about that because they don't have savings, and their equities are in their houses. There is a greater percentage of the baby boomers generation who has savings, but much less among the yuppie and subsequent generations. That could translate into ineptitude and complete lack of knowledge or awareness about investment or currency exchange.
Now that China is the lowest producer and manufacturer in the world, and fast approaching to become the biggest consumer society in the world, the future strength of USD is in doubt. There is also a whif (beginning) of a Eurasian economic development and the China Oceanic mutual economic development. The potential of a less stable USD is real and will become more likely as we approach toward year 2010, if not sooner. There will be a time when Americans wake up and find prices in stores have gone up 25% to 50% overnight, and they would be totally stunned and bewildered as zombies. What follows could be unprecedented massive layoffs in the US. Even if USD is on par with several other currency and despite the seemingly fictitious high productivity numbers, US workers may not be able to compete with those in China, and there are many reasons for that to be the case.
What then? How will Americans react? Will US come up with some excuse and reasons to nuke Three Gorges Dam in an attempt to stiffle China's rise as economic power? |
