The US Savings Rate briefly fell into negative territory in Q2/Q3 of 2005. It has been positive in all other quarters. In 2008 it was well above 2%. People quote the low US savings rate like it's a doomsday scenario but in reality, it's a rational decision when your interest rates have been below 5% for a decade or more. Saving money when you make 1% on it is actually losing money due to inflation.
Why the Germans save as much as they do with such a low interest rate is a topic for another discussion.
hyperinflation has to do with a loss of faith in the currency. Foreign debt holders know that this America empire is sailing into sunset, and has no way to pay its trillions of dollars back. They'll all dump it one night, causing the dollar to drop 30-40%
Even if this happened (which I very much doubt it will because Japan, China etc. don't want to write off 40% of their holdings or get into a vicious economic war with the US), that's a long way from hyperinflation and general fiscal Armageddon.
US business would love the dollar to fall by 30%, our exports would soar and those companies that depend heavily on manufacturing in China could probably use other hard currency like the Euro. It would crimp our military operations overseas, but when you get down to it a lot of countries still want to be under the American nuclear umbrella and we paid for the nukes a long time ago.
True....to a degree. Our agriculture exports would soar. But alot of other things we produce are complex/advanced products, which depends on cheap parts/oil from....other countries.
As for the military, well, China will pick a good time to crash the dollar (when they've liquidated most of their dollar reserves). Then they'll be able to bring US to its knees without firing a single bullet. Why shouldn't they? it's their turn to be the empire.
China's is an command, export-based economy. Eviscerating its trading partners wouldn't be wise: high-interest rates and weak dollars in the US hurt the Chinese economy--like it or not, our fortunes are intertwined.
Empires are founded on more than just manufacturing capacity. Lacking a dynamic, principled base for its society, when the Chinese economy collapses it will not recover. The Chinese bubble will burst: http://www.foreignpolicy.com/articles/2009/07/23/the_china_b...
Upshot: don't finance your customers, or China 2009 == Lucent 1999
this America empire is sailing into sunset, and has no way to pay its trillions of dollars back.
The US will be able to pay the trillions of dollars back. How? Just printing more dollars and using them to pay. The problem for the investors is that those dollars might not be worth it too much.
But this will be in many years. Right now US creditors don't want to dump the dollar because it would decrease the value of what they hold.
Regarding the currency crash, actually you just need one country (i.e Russia) or a hedge fund dumping a large amount of dollars, forcing others to dump theirs as well in a speedy fashion (kinda like everybody rushing toward the fire exit when someone triggered an alarm)
Ya think? Seems like they'll need to keep printing money further devaluing the dollar and/or raise rates to get foreign buyers interested. I think there has been a lot of attention as of late on the strength (weakness) of the dollar & wouldn't be surprised to see rates tick up after next FOMC meeting.
What we should really be doing is getting the financial firms to buy them like they used to but the yield is much too low. In January 2000, for example, the 5 year yield was around 6.5% (http://www.ustreas.gov/offices/domestic-finance/debt-managem...). The rates have been cut and the yield is a little over a third of that. No wonder nobody wants them.
