The Coming Economic Collapse

Many wonder what the future is for the global economy.  Over the last few years economists have been expressing increasing concerns about the direction the global economy is going in, and the possibility of a worldwide depression. They have been warning about the growing global imbalances in the world economy, and the consequences if not corrected. Yet we live in a time where the global economy is booming, especially in the Anglo-Saxon and Asian economies.  Consumer spending is up.  House prices around the world have risen dramatically.  Unemployment remains low.  The global economy has experienced the longest period of sustained economic growth in recent history. The US$ continues to remain stable.   Interestingly, some of the stimulus for the growth the global economy has recently experienced is a result of decisions made following Sept 11th.  Already, prior to Sept 11th the US Federal Reserve was maintaining a loose fiscal policy in an effort to stimulate economic growth in the US economy, which had slowed down following years of strong growth during the Clinton administration.  Then along came Sept 11th, which threatened to destabilize the American banking system. To prevent this happening, the Fed injected billions into the banking system to provide sufficient liquidity to prevent a run on the dollar and the banks.   Meanwhile, Japan since the late Eighties had been wrestling with a stagnant economy, deflation, and a rising currency.  The Bank of Japan was already printing money prior to Sept 11th to support its own debt-ridden banks and to stimulate the domestic economy, and has continued with this policy ever since: printing yen to purchase American dollars. Japan has been able avoid inflation through having high domestic savings, and by investing heavily outside the country. This has kept the Yen from appreciating against the dollar, enabled Japan's export sector to remain competitive, and kept interest rates at near zero.  As much of Japan's external investments have been in the USA, it has resulted in Japan holding assets worth trillions of US dollars, many of which are invested in US Treasury Bonds and Mutual Funds.   The rapid increase in the money supply of US dollars is the number one reason America's wealth has shifted from the US to Asia and Europe.  In particular, China has benefited enormously from the inflow of dollars which has financed the rapid growth of its economy, providing the capital to develop their competitive export sector.  The Asian economies high rates of personal savings have financed their domestic growth as well as finance the US deficits.  This has continued to allow the USA to maintain its privileged position of retaining the $US dollar as the world's reserve currency; and allowing it to retain its global military and political dominance.   The reason why America has large trade and current deficits is because of the expansion of its money supply, without the corresponding expansion of its productive capacity to produce the wealth to sustain the increase in money in circulation. The lack of domestic savings to provide the investment capital into new manufacturing capacity is also a contributing factor.  The cost of maintaining a large military establishment and the decline in the social fabric of society are also significant contributing factors, both of which consume resources that should be invested in the manufacturing sector for a nation to remain internationally competitive.    So it would appear in the short-term, the loose monetary policies of America and Japan appear to have benefited everyone. Expanding the money supply has provided the capital to support the growth of the expanding Asian economies, especially those of India and China.  Inflation (if you exclude property) has been contained (normally a consequences of a loose money policy) because of China and India being able to produce consumer goods and services cheaply for the global markets, preventing manufactures in the Anglo-Saxon economies from raising their prices.   The increase in the supply of US dollars has been able to finance the growth in global trade.  It has also provided the liquidity to finance the trade in oil, even as its price continues to escalate.   The world has experienced some of the greatest shift of wealth in recent history, from the Anglo-Saxon nations who have dominated the global economy for the last 200 years, to Asia and Continental Europe.  This shift in wealth will shortly result in the economic collapse of the Anglo-Saxon nations ­ their money will become worthless, and their economies will disintegrate into anarchy and poverty.  This collapse will also have disastrous consequences to the Asian economies, which have become depended on exporting to the North American market to support their domestic growth.  While the Asian economies will be severely affected from the collapse of the Anglo-Saxon economies, they will survive and recover.                   Overall view of the topic is that,over the last few years economists have been expressing wearning about the growing global imbalances in the world economy.September 2011 threatened to destabilize the american banking system .Japan has been able to avoid inflation through high domestic savings. Inflation has been contained because of China and India being able to produce consumer goods and services cheply for the global markets.Economies collapse of Anglo-Saxon  will have disastrous conscquences to the Asian economy which depended on exporting to the North America market.

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