For the last decade China has been manipulating its currency to make its currency weaker against the United States dollar. Thus, allowing China to flood the U.S market with cheap goods. When a country has a currency relatively weaker than other countries currencies that country can easily export goods to other countries as its goods are cheaper. Conversely, if a country has a currency that relatively stronger than other countries currency than that country would struggle to export goods as that country's goods would be more expensive. As I've mentioned in previous blogs central banks strive to keep inflation high enough to ensure that growth can occur while keeping inflation low enough so that prices do not increase faster than wages. Typically, an industrialized country such as Japan would want an inflation rate of 2%. It is important to note that 2% is a normal inflation target for central banks in countries such as the U.S and Japan. Inflation has been relatively low in the U.S in recent years. However, the price of health care and college tuition continue to sky rocket. While wages remain relatively stagnate. It is important to note that health care expenses is the leading cause of bankruptcy in the U.S and student loan debt in America is well over a trillion dollars. This could lead to yet another financial crises if for some reason college graduates are unable to find work. Also, the U.S federal government in over $20 trillion of debt. Much of this debt is owed to other countries and this too could result in a financial crises.
Despite this concerning situation I think the economy is going to slow burn not crash. In other words, the economy the economy will slowly become more and more inefficient until it is unable to support more debt fueled growth rather than suddenly crash. Catherine Austin Fits has frequently pointed out in her quarterly wrap ups that the economy is not going to crash its going to slow burn. Indeed, when a financial market crashes it does not happen out of a void there is a lengthy process leading up to that event. One the biggest problems with the mainstream media is that it makes it seem as if events are happening suddenly out of a void. In reality these events had a long process leading up to them. I would discourage readers from paying too close of attention to mainstream media. Instead read about subjects that you are interested in and find alternative media outlets on websites such as You Tube. Also, one could probably find a podcast for just about every subject.
As I've pointed out in previous blogs, debt as monetized currency is coming to an end for reasons I've pointed out in this blog and previous blogs. When this happens there will be a void that would have to be filled. Some people have argued that there will be hyper-inflation. I do not think that Americans will lose confidence in the U.S dollar because they have been raised to believe that it has value. Also, if they lose trust in the U.S dollar they have few alternatives to use as currency. Electronic currencies such as Bitcoin have proven to have volatile values and it would be difficult for Americans to switch to using the currency of a foreign country. Therefore, hyper-inflation should not occur. As I've pointed out in a previous blog the government can try to fill this void by printing money through the central bank or individuals could fill the void by establishing debt free money simply by saving money and localizing the economy. Localizing the economy would mean that consumers would buy from locally owned businesses when possible and people with time and money to invest would invest regionally and locally. This course of action would stabilize the economy and further stabilize the currency. Middle class and working class individuals would have the most to gain from a localized economy.
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