We wouldn’t be the only ones having trouble getting our fleet to sea either. Unless this 20 meter rise is only going to effect the US of course…
As others have said, if we got a 20 meter rise trade and the stability of our currency would be the least of our worries. Most of our major coastal cities would be under water, ehe?
-XT
So this is a good time for someone from the Eurozone to visit the US?
And you think the world would just stop? Cities would be rebuilt somewhere else and life (and trade) would eventually go on.
I think a 20 meter rise would put quite a crimp in international trade…at least if it happened relatively quickly. Over a hundred years or so…maybe not so much.
You are right though…eventually we’d move on. The world wouldn’t end.
-XT
Getting back to the original theme of the thread–or at least, something closer to it than a 20-meter rise in sea level–how many more devaluations can the American dollar undergo before it ceases to be the world’s reserve currency?
Why would it? Reserve currencies are not held because they have some arbitrary fixed value, they are held because their underlying economies are strong and stable. Do you think if the Mexican Peso suddenly doubled in value tomorrow, the Chinese are going to start keeping reserves in Pesos? Yes, the US economy is in a bit of a downturn right now, but no one is expecting the US to collapse into anarchy in the near future.
The question I have is, what do Americans really make that gets exported?
I’m gonna use Europe here as that is where my experience is…
American cars in Europe? They are all made in Europe as far as I know.
Computers? Dell is pretty big over there, as is HP and others, I guess all computers are manufactured in Asia anyway, so most jobs will go around supporting Dell’s infrastructure.
What else is there? I seriously want to know? When I normally went around shopping for stuff in Europe I never really found anything that was American.
I suppose we are just going to have to start making our own stuff again. I think that would be great for our economy. We used to make TVs, and electronics, plus other stuff. Apple is American so that’s a good start.
It just pisses me off that China has us by the balls.
America exports lots of things, just because you can’t buy it at Walmart doesn’t mean it doesn’t exist. Capital would be the most important, followed by expertise. A lot of things like heavy equipment, machine tools, offshore oil rigs, Boeing airliners if you want manufactured stuff. Remember consumer products are a tiny percentage of the total transactions in a developed economy - the vast majority of buy/sell deals by dollar volume occurs between big businesses (B2B), for mundane things invisible to the average consumer. T
hat’s how trade works, low cost countries like China produce low tech stuff, high cost countries like the US produce high tech, high value added content stuff.
They can’t do this indefinitely. They do not have the economic principles to maintain a flexible economy required to make the most efficient use of floating exchange rates. They can’t re-tool their economy to meet changes in the investor landscape quickly enough, nor can they untie their money easily enough to shift demand domestically and meet the dangers of inflation.
China’s growth causes its foreign monetary reserves (overwhelmingly US dollars) to increase, because they don’t have the good fundamentals of a modern economy. To sustain growth, they hold on to foreign currency that they are paid for their goods as the underlying value of their currency (in this case dollars and yuan). This causes the yuan to trade lower than would otherwise, keeping Chinese good attractive because of the low price. The foreign currency held (US $) allows the US to grow their economy because the Chinese holdings represent a stable source of funds (Chinese buys our T-bills to hold on to).
Eventually, they will run out of money. Foreign investors will continue to support the Chinese economy through creating infrastructure and capital investments. Why not? It’s cheap to do so, and the Chinese economy shows no sign of slowing down. This will cause a massive strain on their banking system causing hyperinflation and a possible collapse both in terms of the value of yuan and investor confidence. This could also cause the global economy to spin out of control, but I have confidence that the US economy will survive.
Oh, and what’s so bad about not being the world’s reserve currency? We lose a nice chunk of free change from seignorage, but we can always make up the difference by raising taxes.