Hi mishedlo & ild.
((Greenspan will never raise interest rates. ... EXACTLY 100% like it is.))
Are you sure Greenspan is still in control here? I was reflecting the other day on the significance of the US election cycle on the U.S. attempting to keep interest rates low. I've heard commentary that interest rates in the U.S. will remain low because the current U.S. administration would never "let" the U.S. economy go to heck-in-a-handbag during an election year. And while there are certainly "interests" in the U.S. and abroad that would wish for the Bush administration to be reelected, there are also significant interests that would be pleased to see the U.S. economy run into trouble in an orchestrated effort to change U.S. monetary, fiscal, and foreign policy. I would think these "interests" would be very complicated, with many regions in the world, such as Europe, having many players in both camps.
To my mind, whether interest rates rise in the U.S. is almost "zero" dependent on Greenspan's career intentions, and much more dependent on elite geopolitical machinations over the next year ... and I'm not sure at all that U.S. economy will hold up until the 2004 election. And, I'm not sure that it won't either. Just trying to understand where the real fulcrum of the dilemma lay.
Mishedlo:
Re: rising interest rates. I personally don't think rising interest rates will "save" the US$. However, it will precipitate a day of reckoning in the U.S. economy/society whereby the U.S. begins to live within its means. The U.S. simply cannot continue to borrow money from the rest of the world as it is doing to consume goods made by foreign workers, and pay them with overvalued US$. I just can't see it continuing. Will raising US interest rates enable the U.S. to more effectively compete with China? Well, in a sense yes, because at least it will be a step towards reality. The current situation is totally unsustainable. IMO, rising US interest rates may actually hurt China far more than the US "in the short term". Because US$ liquidity has been driving global consumption, and consequently Chinese productive capacity. When this stops hard, it ain't gonna be pretty in China to my mind - for her productive capacity or her banking system. Perhaps Jay could expand on this.
BTW, thanks to Russ and everyone for contributing to this excellent forum. Check it every day. :)
Regards,
Glenn |
