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The final bubble?
Old 07-26-2008, 08:56 AM   #1
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The final bubble?

If Harry Dent, Mohamed El Erian and Sherry Cooper are to be believed, the end (of post WWII US dollar hegemony) is nigh.

The final bubble? | Columnists | Jeff Sanford | Canadian Business Online

Soooooo........mattress, anyone?

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Old 07-26-2008, 09:34 AM   #2
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Words, words, words.

Bottom line is, eventually The Piper Will Be Paid.

When, I haven't a clue. But it ain't gonna be pretty.
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Old 07-26-2008, 10:03 AM   #3
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There are some who believe the war in Iraq was started because of the momentum toward pegging oil to the Euro and not the dollar.

Who wants to hold dollars when the future looks full of US deficit spending, inflation, and dollar devaluation?

You'll probably get some grief here over using Canadian Business.
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Old 07-26-2008, 10:06 AM   #4
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Turn out the lights, the party's over! No such thing as a free lunch so's we got to pay up. That's the bad news.

The good good news - the Earth is Flat ala Friedman - the standard of living is rising out there as they become more 'American.' We won!

Curmudgeon wise - I'm not a big fan of RAP music. But I have to remember my Father thought Welk was a swinger and rock and roll sucked.

heh heh heh - ying and yang, stay balanced, party on! My plan is to buy American with mad money since we you can only fit so much poop in the punch bowl and the horses have left the barn on international, commodities etc.
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Old 07-26-2008, 10:17 AM   #5
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Turn out the lights, the party's over! No such thing as a free lunch so's we got to pay up. That's the bad news.

The good good news - the Earth is Flat ala Friedman - the standard of living is rising out there as they become more 'American.' We won!

Curmudgeon wise - I'm not a big fan of RAP music. But I have to remember my Father thought Welk was a swinger and rock and roll sucked.

heh heh heh - ying and yang, stay balanced, party on! My plan is to buy American with mad money since we you can only fit so much poop in the punch bowl and the horses have left the barn on international, commodities etc.
Careful, unclemick, they'll be confiscating that curmudgeon certificate...
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Old 07-26-2008, 10:20 AM   #6
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You'll probably get some grief here over using Canadian Business.
Why is that? Is it a goofy publication or something? Never heard of it.
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Old 07-26-2008, 11:03 AM   #7
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I've never heard of Canadian Business Online until today, but have read a couple of Harry Dent's books and have a lot of respect for his opinion. I've book marked this website and am anxious to read next month's issue when Dent offers his, "more detailed method for moving through the coming volatility...."
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Old 07-26-2008, 01:56 PM   #8
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Looking at some of the threads this weekend, it makes me wish I went long tinfoil futures before yesterday's market close.
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Old 07-26-2008, 02:01 PM   #9
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Soooooo........mattress, anyone?

Why the mattress? That would actually be the worst thing to do if you believe a massive devaluation of the dollar is coming our way. They do offer a solution (if you believe in their theory): invest abroad. They are not calling for the end of the world, just for a realignment of world powers. The world has been through many of those in the twentieth century alone. For the 21st century, many experts seem to call for the emergence of a three world power system centered around the US, the EU and China/India. I don't see it as something to be afraid of as long as we stop resisting the changes that are coming.
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Old 07-26-2008, 06:45 PM   #10
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Why the mattress? That would actually be the worst thing to do if you believe a massive devaluation of the dollar is coming our way. They do offer a solution (if you believe in their theory): invest abroad. They are not calling for the end of the world, just for a realignment of world powers. The world has been through many of those in the twentieth century alone. For the 21st century, many experts seem to call for the emergence of a three world power system centered around the US, the EU and China/India. I don't see it as something to be afraid of as long as we stop resisting the changes that are coming.
Agree. We got used to thinking of US as the "big enchilada" and some think it's the end of the world if we are no longer so. Well, we were not the big enchilada for most of our nation's history and we did just fine and we will do just fine in the future once we get past a little attitude readjustment.
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Contemplating Armageddon...
Old 07-28-2008, 07:27 AM   #11
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Contemplating Armageddon...

The "growth is good" meme has served the U.S. well for over 200 years. This fundamental assumption is built into our economy (and other mixed socialist-capitalist economies) in numerous ways. The interesting question is whether an economy built on this meme is sustainable. If not, then you must either re-engineer a new economy built on a fundamentally different assumption, or watch the whole system collapse.

What would an economy built on the "contraction is good" meme (and then, after two or three generations, the "stasis is good" meme) look like? It would likely be radically different than our current economy, but I haven't done any further thinking on this topic. What would need to contract? Population level, economic activity, production of goods and services, environmental footprint, etc. You name it, we probably have too much of it today.

If we do in fact need to re-engineer our economy from the ground up, then I have little faith in the ability of our current political system in general and either major political party in particular to do the job. As anyone who has engineered complex systems can attest, compromise, half-measures, and short-term patches don't work when performing a major system re-design.

OK, enough pontificating.
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Old 07-28-2008, 07:34 AM   #12
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Originally Posted by Meadbh View Post
If Harry Dent, Mohamed El Erian and Sherry Cooper are to be believed, the end (of post WWII US dollar hegemony) is nigh.

The final bubble? | Columnists | Jeff Sanford | Canadian Business Online

Soooooo........mattress, anyone?

according to Harry Dent things in the US will get better around 2022 because the next generation is very large like the baby boomers. this cycle has been going on for a long time where every other generation is exceptionally large compared to the last.

juat look around, young kids and babies everywhere. and in the economic numbers, children's retail stores are one of the few categories that are still seeing growth
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Old 07-28-2008, 08:44 AM   #13
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What would an economy built on the "contraction is good" meme (and then, after two or three generations, the "stasis is good" meme) look like?
Madison Ave might have some difficulty selling this "contraction is good" thing. Maybe:
"Die Younger-Why not?!"
"Live Like the Coolest Coolie"
"Love your kids? Help them work harder for less than you did!"
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Old 07-28-2008, 08:56 AM   #14
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Madison Ave might have some difficulty selling this "contraction is good" thing. Maybe:
"Die Younger-Why not?!"
"Live Like the Coolest Coolie"
"Love your kids? Help them work harder for less than you did!"
"More quality and smaller to handle!"
"Who needs a McMansion anyway? Smaller is good!"
"A simpler time...like when your great-grandparents lived. Buy a bungalow today."
"You can afford only one cool gadget a year...make sure it's the 24Gb iPhone 3G Wii"

Good post, Socca.
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Old 07-28-2008, 09:07 AM   #15
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Originally Posted by socca View Post
The "growth is good" meme has served the U.S. well for over 200 years. This fundamental assumption is built into our economy (and other mixed socialist-capitalist economies) in numerous ways. The interesting question is whether an economy built on this meme is sustainable. If not, then you must either re-engineer a new economy built on a fundamentally different assumption, or watch the whole system collapse.

What would an economy built on the "contraction is good" meme (and then, after two or three generations, the "stasis is good" meme) look like? It would likely be radically different than our current economy, but I haven't done any further thinking on this topic. What would need to contract? Population level, economic activity, production of goods and services, environmental footprint, etc. You name it, we probably have too much of it today.

If we do in fact need to re-engineer our economy from the ground up, then I have little faith in the ability of our current political system in general and either major political party in particular to do the job. As anyone who has engineered complex systems can attest, compromise, half-measures, and short-term patches don't work when performing a major system re-design.

OK, enough pontificating.
I agree with your premise, yet am not sure that the underlying root of the problem is our reliance on the growth is good.

One of the big benefits I feel and THE biggest problem with capitalism is creative destruction. As money and capital and ideas flow from one idea to the next, many things are created, and concurrently destroyed. People are laid off and people are hurt, but (trying not to delve into Soap Box here) all in all the products become better over time for a better price. As you mentioned our mixed economy, as we try to dampen the negative effects and harbor the positive effects of our mixed economy, we eventually start to overextend ourselves leading to a devaluing of the dollar. Issuing more dollars (some believe) can help the economy very short term. But, then again, you can't have your cake and eat it too. Many of our "pro-growth" policies are not incredibly pro-growth when you throw in all of the taxes, redistribution, deficit spending, printing money, etc.

It IS a matter of preference though, some would say who needs growth when we have 10+% living in poverty, yet there are tradeoffs to any situation naturally.

I just see this as the natural growth model. Those who are the farthest behind have the most room and the quickest growth. After World War II, the infrastructure that was put into the U.S. was unparelled in the developed world (what WAS the developed world?), and we grew for it. After our infrastructure of electricity, gasoline, roads, highways, schools, hospitals were all put in place, it became a matter of improvement, which would take longer than just plopping some roads in the middle of India. Point being, the greatest potential for growth is in the countries that are the farthest behind.

This does not mean that U.S. will become a third-world country. It means that if we continue to invest in our infrastructure and our future and have responsible leaders, we will continue to grow at a pace maybe not as fast as we originally had. What makes you think that most companies in the country cannot continue to post better earnings than the decade before? I am not so certain that it is impossible. Remember, we may not grow as fast, but last I checked, our GDP is barely below the entire E.U.'s
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Old 07-28-2008, 05:52 PM   #16
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I agree with your premise, yet am not sure that the underlying root of the problem is our reliance on the growth is good.

One of the big benefits I feel and THE biggest problem with capitalism is creative destruction. As money and capital and ideas flow from one idea to the next, many things are created, and concurrently destroyed. People are laid off and people are hurt, but (trying not to delve into Soap Box here) all in all the products become better over time for a better price. As you mentioned our mixed economy, as we try to dampen the negative effects and harbor the positive effects of our mixed economy, we eventually start to overextend ourselves leading to a devaluing of the dollar. Issuing more dollars (some believe) can help the economy very short term. But, then again, you can't have your cake and eat it too. Many of our "pro-growth" policies are not incredibly pro-growth when you throw in all of the taxes, redistribution, deficit spending, printing money, etc.

It IS a matter of preference though, some would say who needs growth when we have 10+% living in poverty, yet there are tradeoffs to any situation naturally.

I just see this as the natural growth model. Those who are the farthest behind have the most room and the quickest growth. After World War II, the infrastructure that was put into the U.S. was unparelled in the developed world (what WAS the developed world?), and we grew for it. After our infrastructure of electricity, gasoline, roads, highways, schools, hospitals were all put in place, it became a matter of improvement, which would take longer than just plopping some roads in the middle of India. Point being, the greatest potential for growth is in the countries that are the farthest behind.

This does not mean that U.S. will become a third-world country. It means that if we continue to invest in our infrastructure and our future and have responsible leaders, we will continue to grow at a pace maybe not as fast as we originally had. What makes you think that most companies in the country cannot continue to post better earnings than the decade before? I am not so certain that it is impossible. Remember, we may not grow as fast, but last I checked, our GDP is barely below the entire E.U.'s
Creative destruction is part of the natural cycle of biological systems, which are now being viewed as models for complexity. Just as the forest fire leaves destruction in its wake, it ultimately leads to new, healthy growth, innovation and renewal.

Economist's View: "Creative Destruction's Reconstruction"
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Old 07-28-2008, 09:06 PM   #17
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Creative destruction is part of the natural cycle of biological systems...
George Orwell suggested in his novel Nineteen Eighty-Four that creative destruction via perpetual war might be economically desirable. Our latest experiment with this approach doesn't seem to be working.
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Old 07-29-2008, 06:38 AM   #18
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Wow, as someone who has always believed in demographics driving the US economy, I have to say that Dent's position has created fear in me for the first time in my financial life.

Another problem I see is that if the US ecenomy tanks, I simply haven't seen enough evidence of financial independence in other markets to not believe they will tank right along side the US markets if this proves out.

If you buy into this whole thing, you can change the name of the forum from "Early Retirement" to "Early Destitution".
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Old 07-29-2008, 10:10 AM   #19
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Just clarifying that I believe creative destruction is the GREATEST part of a capitalistic system. The few downfalls to it, however, are what are focused on by the media and politicians which prevent much of the dynamic nature of a true capitalist economy.
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Old 07-29-2008, 12:06 PM   #20
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George Orwell suggested in his novel Nineteen Eighty-Four that creative destruction via perpetual war might be economically desirable. Our latest experiment with this approach doesn't seem to be working.

I think the people forget the fact that Orwell was English. I think he was trying to write about the fact that Europe has been continually at war for the last 1000 years or so with the same few participants and the sides changing a bit every few hundred years.
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