It don't matter how the ratings of TB, but more importantly what is the rate you pay now. The Japan have the world lowest treasure bills rate only under 2% for ten years note, and China is paying less than US is. The reason is because both China and Japan have little external debt, but the US have a lot of foreign debt. The current account defecit is the best measure for the balance of trade since US have over 800bilions net lost, so you are wrong about your assumption that most US debt is from internal.IDonT said:
US economic decline and impact on force projection capabilities
- Thread starter Andrew
- Start date
Of course all the economies are interdependant in light of today's rampant globalization. If either US or china would to disappear overnight, it would send the other country into huge economic nightmare.
Also, except for military power or, should we say, political strength and influence that military power gives, nominal nor ppp gdp is next to meaningless. per capita product is more valuable when comparing economies. i mean, EU gdp just got much bigger after 10 new countries got into EU, but realistically that didn't make EU stronger overnight.
When we are talking about gdp, i must say PPP is important. Its not just for standard of living. Thing is that one just can not compare lets say a US engineer and an indian engineer by the nominal salary they get for the SAME work. Lets say they both design the same car/toilet/whatever. But US guy will get 200 grand for his job whil indian will get maybe 20 grand. Same production is going on, but there's just more money in the game because of higher cost of living. PPP is used to remedy just those kinds of situations. It's far from precise, yes. Lots of things work on cultural level too, like housewives and such, who still contribute to a country's productivity even though their productivity can't be quantified. But PPP is the step in right direction.
Also, except for military power or, should we say, political strength and influence that military power gives, nominal nor ppp gdp is next to meaningless. per capita product is more valuable when comparing economies. i mean, EU gdp just got much bigger after 10 new countries got into EU, but realistically that didn't make EU stronger overnight.
When we are talking about gdp, i must say PPP is important. Its not just for standard of living. Thing is that one just can not compare lets say a US engineer and an indian engineer by the nominal salary they get for the SAME work. Lets say they both design the same car/toilet/whatever. But US guy will get 200 grand for his job whil indian will get maybe 20 grand. Same production is going on, but there's just more money in the game because of higher cost of living. PPP is used to remedy just those kinds of situations. It's far from precise, yes. Lots of things work on cultural level too, like housewives and such, who still contribute to a country's productivity even though their productivity can't be quantified. But PPP is the step in right direction.
Totoro said:
As I written earlier
GDP= Consumption+Investment+Government Spending+Net Exports
PPP accounts just the Consumption category. Investments and Government spending on the country, have costs that cannot be realized by PPP. For example the PPP exchange rate is 10 to 1 based on a basket of goods (cars, food, etc), but the real exchange rate is 5 to 1, so if I was investing on your country, I will still use the 5 to 1 exchange rate instead of the PPP exchange rate. Therefore my 1 million investment translate to 5 million in your currency no 10 million.
IDonT said:
all those are taken into account by PPP, too. You consume 100 tons of steel in US same as you would in india. but to produce/transport/consume them you'd pay less in india than in US. You invest 100 000 dollars in your business. In US youd get maybe one more employee, in india you get ten of them. Government spends 100 million to build 20 km of highways in US, same 100 builds 100 km of highways in india.
GDP is about productivity. And fact of the matter is that its hard as hell to measure that. How do you measure the know how for example?
Simple way to go about it - just count the money. And thats nominal GDP. But there's so much more to it.
Another very simple example is this : look at the list of country's GDP, nominal and PPP. They're all in dollars. Now look at US. Its nominal and PPP GDP is the same. Which of course it would be, since it does take into acount consumption, investment, exports, govt spending, the whole deal.
US economy might drop abit but it is unlikely to fall apart like what the russian experienced. russian has to change their entire political and economical system; while the US is well rooted into the global economy today.
as for the british example, you have to note that their main industrial based (UK) were taking damage from german bombers, while US still has a fully operational industrial bases, several of them in fact! the UK also made some error in their 'investment of weapons', their own dreadnought design cause their entire warfleet to become obsolete, allowing other powers to race against them in building a new post-dreadnought fleet, the rise of carriers again ended the effective use.
1 of UK most advanced battleship, Prince of Wales, sunk not far from where i am sitting now by fighter-bombers, off the coast of malaysia. and after that, it was clearly over, as their remaining forces after the war was in bad shape and without an undamaged industrial base, they just couldn't rebuild their power while tending to the need of their damaged homeland.
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there is simply NO comparision between the superpower that has fallen and what we had seen of the US. they might be weaken, but they are still above everyone else. i think IF they were weaken when another power is strong, there might be a problem for them, but right now, EU and China isn't prime material yet. so i think it is too early to think this would be the start of the end of rome.
i believe many countries (the average one; excluding the power contender like EU/China) will aid US secretly to maintain some level of power status quo. US is far away form most countries, hence the rise of say EU and China will have more neighbouring countries that are concern with the lost of their own influences. if you get my point. (basically i am saying, "allied the far and attack the near!" will be what non contender are doing, their influence while small must also be factor in the the world power equation)
as for the british example, you have to note that their main industrial based (UK) were taking damage from german bombers, while US still has a fully operational industrial bases, several of them in fact! the UK also made some error in their 'investment of weapons', their own dreadnought design cause their entire warfleet to become obsolete, allowing other powers to race against them in building a new post-dreadnought fleet, the rise of carriers again ended the effective use.
1 of UK most advanced battleship, Prince of Wales, sunk not far from where i am sitting now by fighter-bombers, off the coast of malaysia. and after that, it was clearly over, as their remaining forces after the war was in bad shape and without an undamaged industrial base, they just couldn't rebuild their power while tending to the need of their damaged homeland.
---
there is simply NO comparision between the superpower that has fallen and what we had seen of the US. they might be weaken, but they are still above everyone else. i think IF they were weaken when another power is strong, there might be a problem for them, but right now, EU and China isn't prime material yet. so i think it is too early to think this would be the start of the end of rome.
i believe many countries (the average one; excluding the power contender like EU/China) will aid US secretly to maintain some level of power status quo. US is far away form most countries, hence the rise of say EU and China will have more neighbouring countries that are concern with the lost of their own influences. if you get my point. (basically i am saying, "allied the far and attack the near!" will be what non contender are doing, their influence while small must also be factor in the the world power equation)
DumLoco
New Member
I agree with akinkhoo and others, the US is still far ahead and globalization makes al countries interdependant.
I hope that in a few decades we could see a nineteen-eighty-four escenario, with USA and conquered countries as Oceania, EU + Russia as Eurasia and PRC and conquests as Eastasia.
That would be totally cool
Ok, no more desvirtuation, sry.
I hope that in a few decades we could see a nineteen-eighty-four escenario, with USA and conquered countries as Oceania, EU + Russia as Eurasia and PRC and conquests as Eastasia.
That would be totally cool
Ok, no more desvirtuation, sry.
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:roll: IDont, you should start enrolling yourself in an Economic course before you start bashing the reliability of PPP and I believe you have to admit that both PPP and nominal/real GDP has its on pros & cons :rofl: Ya.. Prince of Wales.. That's the battleship sunk by Jap's kamikaze bombers before they start their amphibious assault of the coast east peninsular malaysia and through land route from Thailand. Sad thing is Prince of Wales doesn't has any chance to retaliate, much like a sitting duck in a pool of ermhh... bees perhaps. ^^ by the way akinkhoo, I am from Malaysia. Nice to see one of my friendly neighbours in this forum.
It well known that the US is the world's biggest economy, taking up about 30 per cent of global GDP, but it's also the world's biggest debtor country. The federal government's books tab for the long-term promises the US Government has made to creditors, retirees, veterans and the poor amounts to over US$43,000 billion, US$145,000 per US citizen, or US$350,000 for every full-time worker and this figure does not even take into account all the personal debts such as credit card bills and mortgages. With a low interest rate running as low as 1 per cent running for the past three-four years in a row, savings plummeted to just 1.8 per cent in 2005 , below 0.4 per cent since 2005. In 2000, household debt broke 18 per cent of disposable income for the first time in 20 years. Credit card debt alone averages US$7,200 per household.
The US Government indebtedness is financed this way: The US now runs a trade deficit roughly 7 per cent of its GDP and the gap is widened every day. Its citizens are spending ever more on foreign goods, and with the US dollar as the international currency, the US Government just prints money to finance the deficit. And with this money, central banks in the surplus countries purchase most of the US Treasury bonds as currency reserve.
By now, China & Japan are the largest creditor of the US Government. As for Hong Kong, most if not all of our reserves are in US dollar denominated assets. The US Government in turn uses this foreign borrowed money to finance as much as 90 per cent of the federal deficit. The federal deficit is expected to be running at about US$3 billion a day at the moment.
Put it simply, the Americans have been living way beyond their means. On top of this, the Bush Administration is cutting tax at least three times while fighting an expensive war in Iraq, which has already cost the country US$800 billion, and currently progressing at US$5.6 billion per month. Now the US economy is dependent on the central banks of Japan, China and other nations to invest in US Treasuries and keep American interest rates down. The low rates keep American consumers snapping up imported goods.
It's clear that this situation is unsustainable, The federal budget deficit would hamper the nation's ability to absorb possible shocks from the soaring trade deficit and the housing boom. Now he may have to add two more worries: soaring oil prices and cyclones.
The US is now clearly in huge trouble, economically, socially, politically, and internationally. The Bush Administration bungled big in cyclone Katrina's aftermath in New Orleans, and then a minor rerun from Rita in Houston, and this will trigger the general outburst of people's dissatisfaction with the government, leading to great internal turmoil lasting for many years. In all likelihood, long-term interest rates are going to rise, and the greatest property bubble the world has witnessed is going to burst in the next one to two years.
Part of the reason Americans are saving so little is that they feel they have gotten wealthier. In the late 1990s, their stock and pension investments were growing and now their houses are worth more than they ever imagined. Low interest rates are probably discouraged saving and encouragedborrowing. Another reason the saving rate is falling is because pension benefit payments are increasing faster than pension contributions.
When an employer makes a contribution to a retirement plan, it's counted as income. When the employee retires, receives a pension payment and spends the money, it's counted as spending, but not income. The income was recognized long ago.
It may seem good to some of you now, but there are problem.
As the generation covered by traditional pension plans retires and starts spending their pension benefits, it is increasing consumer expenditures. But employer contributions to pension plans have been flat. This difference explains a small part of the decline in the saving rate.
The US Government indebtedness is financed this way: The US now runs a trade deficit roughly 7 per cent of its GDP and the gap is widened every day. Its citizens are spending ever more on foreign goods, and with the US dollar as the international currency, the US Government just prints money to finance the deficit. And with this money, central banks in the surplus countries purchase most of the US Treasury bonds as currency reserve.
By now, China & Japan are the largest creditor of the US Government. As for Hong Kong, most if not all of our reserves are in US dollar denominated assets. The US Government in turn uses this foreign borrowed money to finance as much as 90 per cent of the federal deficit. The federal deficit is expected to be running at about US$3 billion a day at the moment.
Put it simply, the Americans have been living way beyond their means. On top of this, the Bush Administration is cutting tax at least three times while fighting an expensive war in Iraq, which has already cost the country US$800 billion, and currently progressing at US$5.6 billion per month. Now the US economy is dependent on the central banks of Japan, China and other nations to invest in US Treasuries and keep American interest rates down. The low rates keep American consumers snapping up imported goods.
It's clear that this situation is unsustainable, The federal budget deficit would hamper the nation's ability to absorb possible shocks from the soaring trade deficit and the housing boom. Now he may have to add two more worries: soaring oil prices and cyclones.
The US is now clearly in huge trouble, economically, socially, politically, and internationally. The Bush Administration bungled big in cyclone Katrina's aftermath in New Orleans, and then a minor rerun from Rita in Houston, and this will trigger the general outburst of people's dissatisfaction with the government, leading to great internal turmoil lasting for many years. In all likelihood, long-term interest rates are going to rise, and the greatest property bubble the world has witnessed is going to burst in the next one to two years.
Part of the reason Americans are saving so little is that they feel they have gotten wealthier. In the late 1990s, their stock and pension investments were growing and now their houses are worth more than they ever imagined. Low interest rates are probably discouraged saving and encouragedborrowing. Another reason the saving rate is falling is because pension benefit payments are increasing faster than pension contributions.
When an employer makes a contribution to a retirement plan, it's counted as income. When the employee retires, receives a pension payment and spends the money, it's counted as spending, but not income. The income was recognized long ago.
It may seem good to some of you now, but there are problem.
As the generation covered by traditional pension plans retires and starts spending their pension benefits, it is increasing consumer expenditures. But employer contributions to pension plans have been flat. This difference explains a small part of the decline in the saving rate.
jimmyttl said:
Actually I have a degree in Economics with concentrations in International Economics and Development Economics... so I know what I'm talking about. How about you?
PPP is good for measuring the STANDARD of LIVING in a country, in other words a regular Chinese citizen's purchasing power is equivalent to it living a country that has a GDP of about 7 trillion.
If you are measuring comparative strengths between economies, PPP is no good. It does not take into account the labor force, infrastructure, labor mobility, intellectual rights, rule of law, etc.
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