Economic Crisis

Why The U.S. Will Survive, Thrive Through The Economic Crisis

There has been an overabundance of media buildup over the past three or four years concerning the economic crisis and condition of the U.S. with many doomsday scenarios. There is no doubt that some of these media concerns and fears expressed, whether blown out of proportion or not, are real. Unfortunately, most people don’t have the time, knowledge or inclination to filter the hype to completely understand, as much as necessary, of how the doomsday scenario propaganda by the media can be brought down to their own personal lives and everyday decisions they need to make respect to their finances.

My lifetime occupation of about 35 years has been helping Canadians and Americans to do business, move to or invest in one another’s respective countries. It always intrigues me, even when I am providing serious personal or business advice, of how often people make critical financial decisions, most often erroneously, based on the media-hyped topic du jour.

The numerous different opinions as portrayed on the news media have created fear in the minds of many Canadians investing in the U.S. or even Americans doing the same. Most rational observers would agree there is no doubt that the U.S. does have to do something relatively soon deal with these concerns. How the U.S. deals with these concerns is probably where the focus of people’s attention should lie.

I believe the U.S. will both survive and thrive through this economic crisis for the following reasons:

  • U.S. remains the largest free economy in the world, about 40 percent of the total world financial market.
  • Most of the U.S. debt is internal debt — American-to-American as opposed to American with other countries.
  • At the very hint of any crisis anywhere in the world, investors continually to rush to the U.S. dollar and U.S. treasuries as the safest place to hold their funds on the planet. This not only provides a lot of liquidity for the U.S., but it also keeps U.S. interest rates servicing its debt very low.
  • Like Canada in the 1990s, and Greece, Italy and Spain in 2011, governments eventually come to the realization they must take decisive and painful actions to reduce their debt burden down to manageable levels. I’m sure the U.S. government will come to that point soon if they haven’t already.
  • The U.S. has the largest gold reserve of any country in the world, and we all know what has happened to the value of gold over the past decade.
  • U.S. is the largest exporter of food items that help feed the world; people need to eat so the demand is reliable and growing.
  • The U.S. federal government is considered the biggest landlord in the world owning or controlling billions of dollars of commercial land and properties.
  • Because of the rule of law, knowhow and freedom given to its citizens, the U.S. continues to lead in innovation continuing to create the largest and some of the most successful corporations in the world like Apple, Google, Facebook, Coca-Cola, McDonald’s, Wal-Mart, IBM, Boeing, and the list goes on.
  • The U.S. continues to be the destination of choice for legal immigrants from around the world most of whom are very well educated. Because of immigration and one of the best birthrates in the developed economies of the world, U.S. has sustainable population growth whereas other countries, such as Japan, indicate their populations are shrinking.
  • The U.S. and its citizens have been rated the most charitable in the world.
  • The latest in oil and gas drilling technology and the new discoveries in the Dakotas along with the Keystone pipeline from the Canadian oil sands indicate that the U.S., in a very short time, could be at least North American energy independent and will no longer need to import oil from the Middle East or other unfriendly areas of the world.
  • The U.S., in its 235-year history, has gone through substantially worse crises and rebounded with equal or greater economic growth.

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4 thoughts on “Why The U.S. Will Survive, Thrive Through The Economic Crisis

  1. larry toews

    One issue you do not address is the appalling situation facing all Americans, that being the lack of an affordable accessible health care system.

    For a country as big and developed and supposedly safe stable and secure, having such a huge number of people without access to proper healthcare is shameful.

    And the problem is worse for anyone from a country such as Canada who wants to move to the US and live there permanently after the age of 65.

    Having no health care or the possibility of losing everything they ever worked for after a serious illness is a scenario that is just not what people of a country like the US should face.

  2. Duncanomics

    I’m sorry, but your argument is not factually accurate nor does it hold water.

    The U.S. owe over $4.6 Trillion to foreign countries. While a much larger portion of their debt is internal in the form of unfunded liabilities, so what? That’s actually even worse. Foreign creditors are the least of their worries. Do you honestly think any President would put Chinese creditors ahead of U.S. Citizens? No! So the fact that they are indebted to themselves means major cuts across the board. They continue to inflate away their debts by printing money which erodes the standard of living for all Americans. And who can bail out the U.S.? No one! They’re not Greece with the IMF in wait to issue a Eurobond and buy them more time. When they reach the breaking point, it’s game over! Lights out.

    The U.S. have certainly enjoyed their status as the world reserve currency. But recently, foreign investors have significantly cut U.S. debt holdings. China and Russia lead the pack in this regard. Sure, many of the world’s largest investors still flock to the U.S. dollar as a “safe haven” in times of crisis, but for how much longer? Confidence can erode quickly. If that happens and there’s fewer buyers of Treasuries, rates will have to re-adjust upwards. The only thing keeping the U.S. economy on life support right now is artificially low interest rates. Even a rise of 2 percent would wipe out many Americans and businesses at this delicate juncture.

    U.S. Congress haven’t been able to come up with any substantial budget cuts. Government continues to grow at an alarming rate. Their debt super committee ended in deadlock. If they continue spending and raising their debt ceiling, they will eventually completely collapse. They’re already spending twice what they collect in revenues each year and the gap keeps on growing.

    The U.S. gold reserves have never been independently audited and no one knows for sure just how much physical gold they still actually hold. Even so, their debts are so great that even the stated value of all of their gold reserves doesn’t come anywhere close to paying it all off.

    The U.S. federal government is considered the biggest landlord in the world owning or controlling billions of dollars of commercial land and properties which they’ll have to sell off to foreign countries when they really start to get desperate. This won’t come close anywhere close to significantly paying down their debts though.

    The U.S. used to lead in innovation and freedom for business. Now they lead in bureaucratic red tape and crony capitalism. Bail outs for “too big” to fail institutions at the expense of the middle class. Privatized profits with socialized losses for big finance. The EPA are out of control, as are all of the state and federal laws and taxes squeezing small business and innovation at every level. Case in Point, how long does it take to get a potentially life saving drug approved through the FDA these days?

    The U.S. might have been charitable, but donating borrowed money is unsustainable.
    Obama just put the final nail in the coffin on the Keystone Pipeline, killing the project entirely. Canada is now partnering with China to build another pipeline to ship oil to them. This will hurt Americans dearly as they fall even more at the mercy of the middle east nations for their oil dependence while China enjoys cheaper oil.

  3. Graham B

    While it’s true that most of the US debt is internal it is by a small margin – 46% to 54% and the foreign component is growing every year that congress continues to overspend.Further, debt is debt regardless of to whom it is owed.

    It seems to me that a crisis will be necessary for congress to amend their ways. I agree that the US will survive this downturn but the end game will be painful and lengthy.

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