Time for a Liberal economics lession:https://www.thebalance.com/us-economy-wont-collapse-3980688
Here are the top ten reasons why it won't collapse. Included are rebuttals to the negativists' claims.
1. The U.S. debt is $19 trillion. That's more than the economy produces in a year. Though the debt-to-GDP ratio is in the danger zone, it's not enough to cause a collapse. First, the United States prints its money. That means it is in control of its currency. That makes lenders feel safe that the U.S. government will pay them back. In fact, the United States could run a much higher debt to GDP ratio than it does now and still not face economic collapse. Japan, another strong economy that has its currency, has had a debt-to-GDP ratio above 200% for years. It is in no danger of collapse.
Of course, we aren't going to mention the 80 trillion in unfunded liabilities and the fact that being paid back in printed dollars is effectively the same thing as a default. Japan is doing SOOOO well economically too. True the currency hasn't collapsed, they just created an economic malaise that leaves the population so disheartened and hopeless they would rather play video games than get jobs or have sex. Where is the rebuttal to these points? Oh you don't understand the argument well enough to anticipate those objections?
2. Obama added to the debt to get us out of recession, not send us toward collapse. Many of these doomsters accuse Obama of deliberately increasing the debt to destroy the United States
And did it get us out of the recession? Actual employment rates and wage numbers don't say so. Congress doesn't even do budgets anymore. the Debt has DOUBLED under his watch. How is it even relevant if Obama did that "deliberately" or not?
3. The United States won't default on its debt. Most members of Congress realize a debt default would destroy America's credibility in the financial markets. The tea party Republicans in Congress were a minority that threatened to default during the 2011 debt ceiling crisis.
See point 1. Printing money to pay a debt IS default. Oh, no rebuttal to that point is there? And no the Republicans in congress weren't suggesting default, they were refusing to let the government borrow MORE money. That is why its called a debt limit.
4. China and Japan are the biggest owners of the U.S. debt. But they have no incentive to create a collapse. The United States is their largest market. If it fails, so do their economies. Furthermore, China is not selling its dollar holdings. It's remained around $1.2 trillion since 2013. For more, see U.S. Debt to China.
Unless their incentive is to simply grab the world default currency from the United States when they are ready-- and their economy is already struggling, so their own economic woes may force them to drop their holdings for ready cash
5. If anything, the dollar would slowly decline instead of collapsing. It fell 40% between 2002-2008. It's gotten stronger since then because of the financial crisis. Investors flock to ultra-safe U.S. Treasuries and the U.S. dollar as a safe haven.
You mean the world wide financial crisis in which the US currently "sucks the least" - what if the dollar starts to suck more compared to other options? Anyway, if the dollar collapses slowly, then its not a collapse, right? No, If it ends up the same place, Its a collapse.
6. The dollar won't be replaced as the world's global currency. The doomsayers point to gold, the euro, or Bitcoin as a replacement for the dollar. It's true that the dollar's value is supported by its role. But none of these other alternatives have enough circulation to replace the dollar. See Will the Yuan Replace the Dollar?
And circulation can't change can it? I mean the dollar has been the world reserve for thousands of years... no wait, wasn't it Sterling that had that role just 100 years ago? Hmm, maybe these other alternatives will gain circulation and credibility as BRICS is working hard to do, and people will switch because they are tired of the dollar being defaultied on by money printing?
7. The Fed's Quantitative Easing program and low current Fed funds rate won't cause hyperinflation. If anything, these programs have created a liquidity trap. That's when people, businesses, and banks hoard the extra cash instead of spending or lending it. The real cause of hyperinflation has been debt repayments to fund wars.
And when people Stop hoarding it because they become optimistic? And aren't we in foreign wars right now as well?
8.The stock market hit new highs in 2015 and 2016. That's a sign of business prosperity since stock prices are based on corporate earnings
They are based on what!?!
Yes, just ask anyone who lived through the Wiemar hyperinflation how high the stocks were and what their prices were based on.. And no, with the federal government investing in the stock market via proxies (that is essentially what QE is and was) stock prices are NOT based on earnings. Look at some Modern P/E ratios will ya?
9. Consumer confidence hit a nine-year high in 2016. Consumer spending drives almost 70% of the economy
Yeah, the 2008 collapse was nine years ago, so basically we are back where we started before that? And if people are spending more money, won't that mean that liquidity trap you talked about in point 7 is breaking up and money is flooding into the economy? You know after Trump was elected we had our second rate hike in 10 years as the fed fears that inflation.. but wait, what does a rising rate mean for a government that borrows a trillion a year?
Economic growth is slow but stable. Since the Great Recession, the economy has grown between 1.5% to 2.7% per year. According to business cycle theory, a bust only occurs after a boom. That's when GDP is more than 3%, which hasn't happened since 2004 and 2005. For more, see GDP by Year.
Mind this lukewarm growth has been created by the injection of over 8 trillion in government spending (debt) into the economy. Were is that expected 2.5X Keynesian multiplier now? Very impressive result, don't you think? And small growth in our economy unable to keep up with the growth of debt spending is supposed to be encouraging how? You do know its the economy that gets taxed to pay stuff back if you aren't defaulting via inflation, right? If the tax base grows by 3% and the interest grows by 6% how will that help keep America solvent?
Go sip your latte, hon.. Maybe look up the meaning of the word rebuttal on your iPhone. Otherwise, shutup. The adults are talking.
About the Author: She received an M.S. in Management from the Sloan School of Business at M.I.T. in 1987, an M.S. in Social Planning from Boston College in 1978 and a B.A. in Psychology from the University of Rochester in 1976.She is the author of The Ultimate Obamacare Handbook: A Definitive Guide to Your Benefits, Rights, Responsibilities, and Potential Pitfalls.