Well, the Chinese and Arabs know this ... which is the very reason that the Chinese keep buying US Treasury bonds and the Arabs keep investing petrodollars in the USA. This allows the US gov't and US banks to then loan the Chinese and Arab money back to US consumers, who in turn keep spending that money to buy Chinese goods and Arab oil. As long as the wheels of this 'credit machine' can keep turning, i.e. as long as heavily indebted consumers can keep borrowing more money and avoid bankruptcy, then the cycle can continue. However, once this is no longer possible, the entire money flow machine could come crashing down like the 'house of cards' it actually is. This is also the reason that the 'tin foil hat' crowd believes that the only option available to the US gov't is to keep printing more new US dollars as fast as possible, thus reducing the value of the US$ and along with it the value of US consumer debt which must eventually be paid off (and screwing the Chinese and Arabs in the process by devaluing their US$ holdings).Without proper regulations of industry to make sure there is some amount of balance in the economy, American will stop being the largest consumer in the world. Our standard of living will dramatically decrease across the board, not just for a few. It is a dangerous domino effect.



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