The coming US dollar crisis Message Board

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Strategies & Market Trends : The coming US dollar crisis

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To: carranza2 who wrote (16980)	1/30/2009 6:48:26 AM
From: Real Man	3 Recommendations Read Replies (1) of 71446

At the core of this crisis is, perhaps, the first ill attempt of globalization. The internet revolution intensified the transfer of capital (which can flow freely) to cheap labor (India and China). The authorities tried to shoot down the imbalances by lowering the dollar, but these attempts were unsuccessful. Our country had to live off credit as real salaries shrank (competing with cheap labor in these countries). It is quite obvious the system was destined for a collapse - you just can't shrink people's salaries and expect them to keep consuming! Yet, capital will keep flowing to where the cheap labor is, as the World borders are quite transparent now. Our GDP is tied to China, since we mark up the Chinese products 10:1. So, as China falls, so do we, and vice versa! The solution? Darn, I wish I knew! It will emerge from this global crisis. My understanding is that the state of eventual equilibrium requires lower standard of living in the industrialized world and higher in the developing world. Yup, that's what this free cross-border flow of capital is doing. There will be unsuccessful attempts to stop it.

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