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With the popular beleif that the US dollar will tank, I thought a bit of balance to the argument could be justified. I have been bearish but I'm contrarian also
This was prompted by an article from John Maudlin @ http://www.frontlinethoughts.com (newsletters)
To long to post, can be read there. I'll summarise the main points
The US trade deficit @ $800 billion is 7% of $12 trillon GDP. Simple maths says 15 yrs to 100% in hock.
But US assets (private sector) is $52 trillion net and $64 trillion gross, with $12 trillion liabilities. Therefore 7% GDP equals 1.2% of US assets.
The $2.5 trillion net foreign debt is a scarey 20% of national income, but 4% of net worth.
Wealth has been growing at 5-6% since 1955, equals $3 trillion a yr. So could borrow indefinately & never owe > 26%. At this rate by 2045 debt to asset is $100 to $500 trillion borrowed from a world economy of 5-8 times as much
He then quoates a corporation borrowing money. A similar example would be borrowing for a house. Say ave $50k worker borrows $200k for a $250k house the repayments are scarey but compared to the asset small & should continue to appreciate over time (or now in W.A.)
Anyway food for thought, this may set the cat amongst the pidgeons for the $US bears.
This was prompted by an article from John Maudlin @ http://www.frontlinethoughts.com (newsletters)
To long to post, can be read there. I'll summarise the main points
The US trade deficit @ $800 billion is 7% of $12 trillon GDP. Simple maths says 15 yrs to 100% in hock.
But US assets (private sector) is $52 trillion net and $64 trillion gross, with $12 trillion liabilities. Therefore 7% GDP equals 1.2% of US assets.
The $2.5 trillion net foreign debt is a scarey 20% of national income, but 4% of net worth.
Wealth has been growing at 5-6% since 1955, equals $3 trillion a yr. So could borrow indefinately & never owe > 26%. At this rate by 2045 debt to asset is $100 to $500 trillion borrowed from a world economy of 5-8 times as much
He then quoates a corporation borrowing money. A similar example would be borrowing for a house. Say ave $50k worker borrows $200k for a $250k house the repayments are scarey but compared to the asset small & should continue to appreciate over time (or now in W.A.)
Anyway food for thought, this may set the cat amongst the pidgeons for the $US bears.
