It's all riding on the faith of the rest of the world in the US. Watch the USD. Once it plunges, it's over. Won't be able to print money anymore. Until then they can print away a lot of problems.
If you compare the U.S. to the rest of the world in terms of wealth, measured by productive land, population density, industrial development, and access to critical natural resources it is still in the #1 position and has the best natural defenses with no hostile nations on its borders.
Economics is all relative. Even if the U.S. is a disaster in many ways it only has to be as good or better than other large economic blocks in order to be competitive. Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position.
Consequently, a "plunge" is very unlikely. More likely is a few more decades of high inflation, which is just a backdoor way to default on pension, social security, and debt obligations, followed by some kind of new stasis.
The people buying US debt are not dumb. They fully understand that it is impossible for the debt to ever be "paid" in any conventional sense. What they are betting is that the U.S. is still a better investment than other nations and that owning U.S. debt gives them leverage and access that outweighs the nominal losses. That is unlikely to change.
You are right. When presented with offers you can not refuse the smart thing to do is to go along, as a matter of survival.
> Since the U.S. is in a superior territorial position and has the advantages of accumulated wealth and knowledge you really have to go out of your way to f--- things up for the U.S. to ever fall out of a leadership position.
They really have gone out of their way. I give it 5 years tops and U.S.A. will be given its U.S.S.R. moment. Don't worry, no actual oligarch families will be harmed in this process.
I think the US is in the middle of a cyberwar with Russia (which it may have already lost) in which physical borders mean very little.
No, the only continent where population isn't growing is Europe [0], where it is relatively flat. Everywhere else is growing. For individual countries, the only ones with negative growth are in Europe, Islands, and Syria [1].
[0] https://www.statista.com/statistics/270859/natural-rate-of-p...
[1] https://data.worldbank.org/indicator/SP.POP.GROW?year_high_d...
https://en.wikipedia.org/wiki/Sub-replacement_fertility#/med...
Happy (thought) travels!
Proposals have also been floated to require that retirement accounts such as IRAs and 401(k)s invest in Treasury bonds. That would give the Treasury a guaranteed debt buyer at whatever interest rate they choose to offer. All in the name of "safety" and protecting peoples' retirement accounts from the risks of the stock market of course.
If the USD falls so does every other currency. You wouldn't see the kind of money people want in currencies moving into less fungible goods that would hold value over a recession.
I think the more general idea should be - no king rules forever, but the eventual fall of US dominance in the world economy will bring most of that economy down with it.
Historically ( past few decades ), during recessions and international crisis, foreign money would flow into the US, japan, switzerland, etc. But primarily to the US because we are the safe haven for the world and that inflow helped prop up the dollar.
If a major recession or international crisis occurred and foreign money didn't flow into the US, then it would signify a paradigm shift in the international political/economic order.
I don't think ( at least I hope ) we are anywhere near a paradigm shift in the world order given our preeminent military and economic position and our alliances around the world.
But I guess even the brits during reign of the british empire thought that their party would last forever.
For the USD to collapse and not take the rest of the world with it, there would have to be some sort of global currency diversification that diminished the centralized power of the US in the global economy.
To continue the British Empire analogy, there would have to be some currency "revolutions" around the world. If the USD tanked, would Euros be able to replace it? Pounds? Yen? Yuan?
All of the countries tied to those currencies are heavily invested in US debt and many of their fortunes are tied to the US consumer.
That paradigm shift may be coming, but it seems like it's still a ways off to me.
How many years can it be around the corner?
This is patently false.
OPEC quotes oil in U.S. dollars, because people tend to have U.S. dollars lying around as a result of the massive American consumer base (as well as deep and open financial system), but e.g. North Sea oil is sold for pounds sterling and Bakken shale oil is sold for loonies.
Oil is quoted, future and spot, in every major currency FX traders can think up. Wall Street would love if crude were quoted in more currencies. It would mean FX revenue. Sadly for it the world has some sense.