I would like to run my scenario by the thread in regards to currency devaluation.
In order for the global economy to mantain current interest rate levels. Wouldn't it be wise to tame inflation before it happens by currency devaluations? This in turn slows US economy by making our products more expensive to export and there by increasing our trade deficits with debtor nations, who we never intend to repay anyways.
At the sametime this is happening. The US is assured a constant supply of fairly priced items of overseas, since we want Asia to grow, but not faster then us.
If you think back to when the industrial revolution started we were the most admired nation in the world. We had the biggest and best steel mills, paper mills, automobile factories, etc,etc. Today we take great comfort in our great tech advances, superior to everyone and I hope it stays that way.
But, lets say we continued down this path without devaluation of currencies. I feel relatively safe saying "we'd all be millionaires in a decade or so? that means everything we buy starting with bread would cost let's say 10.00, milk 5.00 (without price supports).
And while were enjoying all the tech gadgits and life without concern of what's happening overseas. Asia and especially China have taken over basic commodites such as steel, paper, automobiles, etc, etc.
That is what's happening right now. Very shortly China will have the most modern and largest paper and steel mills in the world! It may not seem eventful, but it is. There ability to supply the world with goods, even though they are basic is gonna get alot easier, very shortly.
That's why when I read all these posts about China being "the place to be". I think the rest of the world said that about us back in the industrial revolution and we wound up on top, because of simple things like paper and steel.
I have this feeling the G-7 thinks devaluation is the way togo for the today and the future. That means interest are incredible high right now and I doubt they will increae anytime soon. I also thank China for being cooperative to this way of thought, as they are the next industrial giant.
I would appreciate opinions?
Ken |
