Sunday, November 07, 2004

The Other U.S. Deficit (washingtonpost.com)

This is an interesting editorial. I've always thought that Chinese currency manipulation was dangerous for America, and this is pretty much the doomsday scenario.

I think it's pretty hard not to see a contraction of the U.S. economy beginning in the next five years. We're looking a labour shortage due to retirement, but those positions may just disappear through attrition or get offshored with no corresponding increase in wages. In some ways, with the advent of offshoring and what we can accomplish in terms of worker production - well, thank goodness people are retiring. People are living way beyond their means now, and when interests rates eventually start coming back up (how else will people want to invest in America), a lot of people in the big house with the BMW in the driveway are going to get pinched when the credit card payment comes due.

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