[GELORA45] Why the US Economy Won't Collapse

[marthajan04 marthaja...@yahoo.com [GELORA45]]

US ECONOMY AND NEWS  HOT TOPICpTop 10 Reasons Why the U.S. Economy Won't 
CollapseBY KIMBERLY AMADEO Updated January 31, 2020Have you come across those 
websites that urge you to prepare for the coming U.S. economic collapse? They 
start by saying the debt is unsustainable, the dollar is in a bubble, or the 
Federal Reserve is printing dollars. Those assertions are all true, but they’re 
nothing new and nothing to panic over.The fallacy in these arguments occurs 
afterward. You'll notice the doomsayers say "if" a specific event occurs, then 
the economy will collapse. For example, "if China sells its dollar holdings" or 
"if the U.S. defaults on its debt." But, they don’t tell you that these events 
are not at all likely. They suggest that you buy guns, gold coins, or their 
survival book to prepare for the event "just in case."Key TakeawaysThe economy 
is based on confidence. Fortunately, the U.S. economy is seen as reliable by 
consumers and investors.While U.S. debt has reached dangerous levels, investors 
remain confident that is will be repaid.Globalization has made international 
markets more intertwined. Foreign countries have no incentive to quickly cash 
in their debt since it would affect their economies as well.Why the U.S. 
Economy Won't FailIn fact, the U.S. economy is doing fine. Here are the top 10 
reasons why it won't collapse. Included are rebuttals to the negativists' 
claims.1.The U.S. debt is $23 trillion, more than the economy produces in a 
year.1 Although the debt-to-gross domestic product ratio is in the danger 
zone, it's not enough to cause a collapse.2 First, the United States prints 
its money. That means it is in control of its currency. Lenders feel safe that 
the U.S. government will pay them back. In fact, the United States could run a 
much higher debt-to-GDP ratio than it does now and still not face economic 
collapse. Japan is another strong economy that controls its currency. It's had 
a debt-to-GDP ratio above 200% for years. Its economy is sluggish but in no 
danger of collapse.2. The United States won't default on its debt. Most members 
of Congress realize a debt default would destroy America's credibility in the 
financial markets. The tea party Republicans in Congress were a minority that 
threatened to default during the 2011 debt ceiling crisis and in 2013.3. China 
and Japan are the biggest owners of the U.S. debt, but they have no incentive 
to create a collapse.3 The United States is the largest market for these 
countries. If the U.S. economy fails, so do theirs. Despite what doomsayers may 
claim, China is not selling all of its dollar holdings. The U.S. debt to China 
has remained above $1 trillion since 2013.44. If anything, the dollar would 
slowly decline instead of collapse. It fell by 58% between 2002 and 2008.5 On 
Jan. 3, 2002, a euro could only buy $0.90. By Dec. 29 2008, it was worth $1.42. 
The dollar's value falls as the euro's strengthens. That's a huge drop in the 
dollar's value, but it's far from a collapse.5. The dollar won't be replaced as 
the world's global currency. The doomsayers point to gold, the euro, or Bitcoin 
as a replacement for the dollar. China's actions indicate it would like the 
yuan to become a more widely-traded currency. None of these other alternatives 
have enough circulation to replace the dollar.6. The Fed's quantitative easing 
program and low fed fund rate won't cause hyperinflation. The real cause of 
hyperinflation has been debt repayments to fund wars. If anything, the Fed's 
programs created a liquidity trap. That's when people, businesses, and banks 
hoard the extra cash instead of spending or lending it.7. The stock market hit 
new highs in 2020.6 Stock prices are based on corporate earnings, so that’s a 
sign of business prosperity.8. Consumer confidence hit a 19-year high in 
2018.7 Consumer spending drives almost 70% of the economy.89. Economic growth 
is slow but stable. Since the Great Recession, the economy has grown between 
1.5%-2.7% per year.9 According to business cycle theory, a bust only occurs 
after a boom. That's when GDP is more than 3%.10 It hasn't been that high 
since 2005 according to a review of GDP by year.10. President Obama added to 
the debt to get us out of recession, not send us into collapse. Many of these 
doomsters accuse Obama of deliberately increasing the debt to destroy the 
United States.What It Means to YouBefore you run out to buy gold or stock up on 
canned goods, do two things. First, read the articles linked in the 10 points 
above. They will give you the facts the naysayers ignore. Or read "How the U.S. 
Economy Works."Sent from my Verizon, Samsung Galaxy smartphone