What keeps the American economy being afloat?

from PolMach Forums
Hello there. This is my first post.
I'm from Europe. And I'm not entirely clear on how your economy still works.

Let's look at the facts!
You are de-industrializing. The bulk of your industrial jobs has moved away to other countries, where the workforce is much cheaper, thus producing with more profits. The effect can be clearly seen on the region now-called Rust Belt, which used to be the American industrial heartland.

(Do you know I have never ever seen a product in my life on which that was written: "Made in the U.S"?)

So your exports are declining, and your population working in services increased to a never-seen-before 80++%. I don't know, but I think generally the service sector is improductive, also wages in this sector are generally lower. So even your domestic demand has to be damaged.

Because of the sharp decline in exports, your trade balance ceased to be in a surplus, instead it had a huge deficit. The imports are basically financed by loans.
Also, your country has a ludicrously huge military spending. Which is also considered to be improductive. This spending is also financed by loans.
And you have been the largest debtor nation in the world for at least 25 years. You must be killed by the interest!

I think the U.S would collapse if nations decided to have euro as the international money instead of dollar, thus not financing your debts any further.
politics
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Reply #1 from JoeUser Forums Top
Welcome KdGergo.

I hope you post again. Hearing from those outside the U.S. would very much help many of us here at JU as it provides some perspective for many of our more ethnocentric bloggers caught in the glass dome of our Mainstream Media (it's much worse then the BBC would have you realize).


I will not attempt to provide you a full rundown of the way our economy works or even a rough outline - I simply haven't the time. I would, however like to address some of your points.

So your exports are declining, and your population working in services increased to a never-seen-before 80++%. - KdGergo

I agree; servicing has become the largest bit of the pie, but I'd like to see your source for that 80%+ number and I'd like to know if you are including professional services in that number - there's a difference between a lawyer and a fast food burger maker though some have attempted to classify burger making as manufacturing (See: current administration).

The fact that blue chip corporations are outsourcing their manufacturing via NAFTA pipelines deciminating American jobs and exports while raising the companies' perceived value in the Dow Jones because of the savings in slave labour is an interesting point raised by your observation and one I'd love to get into for those thinking the American Economy is swimming along.

The imports are basically financed by loans. - KdGergo

Right. Our bonds are bought mostly by Japan and China and helps keep the value of our currency as reported in "The World is Flat" by Thomas L. Friedman.

This value is also aided by the Federal Reserve, a private company who controls interest rates. The higher rates go, the higher perceived value of the currency - keeping inflation at bay.

Also, your country has a ludicrously huge military spending.
 - KdGergo

It's outrageous, nobody spends more then we do. And what for? If you want sources I'll provide them but off the cuff we spend roughly 48% of our budget on military spending - much of it unaccounted for and sealed away from citizen's eyes due to 'national security'.

I think the U.S would collapse if nations decided to have euro as the international money instead of dollar, thus not financing your debts any further. - KdGergo

Eventually we'll have a major correction in the market and we'll see a new depression era unless our spending habits change. I don't really support this last point of yours but it's an interesting question I'll carry around with me for a while.

Thanks.