djsaylor at SPAMprimenet.com
Tue Nov 2 21:55:40 MST 1999
Jose replies at length to Dennis Redmond about how to judge various
aspects of the strength or growth of the U.S. economy versus the rest of the
world. Primarily to illustrate how the switch over to computing has
reshaped the U.S. economy for growth. Dennis Redmond pointed out for
example that the U.S. economy is committed to a much larger proportion of
the economy devoted to military spending than does either the Japanese
economy or the European community. So while growth may be spectacular in
the U.S. does the growth reflect the advantages that Japan or Europe may
have with respect to the U.S. because their spending is not wasted upon
unproductive military spending?
In addition, most of the growth in the U.S. has been concerned with the
vast expansion of financial institutions. This is closely tied to
investments and the strength of the investment of foreign capital in the
U.S. versus those monies being placed in their own economies. As I pointed
out with the quotation from Alan Abelson commentator with the Wallstreet
Journals sister publication, Barrons Magazine:
"The bubble makes the Fed much more gingerly in its approach to any
perceived stirrings of inflation, much more reluctant to aggressively and
preemptively raise interest rates. But the bubble also means that if, for
whatever reason, the Fed does move aggressively on rates, the effects could
be, in a word, ugly...."
Abelson is precisely pointing out that from the U.S. perspective growth
is now a danger for the U.S in the sense that "inflation" is a constant
threat both in Stock Market kiting, and foreign exhcnage shifts. So the
astounding growth of the U.S. has kited the markets, and consequently if
there is a fizzle or bust just as the Japanese suffered roughly tens years
ago what is to halt this from a very serious reversal for the U.S.? For
example apparently the U.S. has agreed to some sort of Asian common currency
scheme centered in Japan. So that while in some ways the U.S. enjoys wealth
over the other centers, if there is a downturn in the U.S. there is
considerable likelyhood that other centers would want to strengthen
themselves against the U.S. because they have an opportunity with the U.S.
bubble to take on the U.S. currency as a dominant tool of U.S. policy.
Coupled with currency is the U.S. reliance upon military threat to back
up their system. This combination is vulnerable to better economic mixes
that don't rely upon first an inflated unrealistically valued equity market,
and two a bloated military which can't be used in relation to the other
great powers to bully their compliance with U.S. interests.
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