This is part two of the ongoing economics myths series. A common refrain among the media these days is that ‘America is in decline’ or that the ‘dollar is going to become obsolete’. The Economist has jumped onto the dollar-is-doomed bandwagon, with the article The primacy of the US dollar looks unsustainable, which offers no compelling evidence that the dollar is actually in decline, or proof that is will become superseded, just suppositions that maybe in the distant future for vague reasons it will be. 95% of economics articles are vague and wishy-washy, often because there is little in the way of solid, empirical evidence to support the author’s view, so the author is left with little recourse but to do a lot of “hand-waving” and hope that the reader doesn’t notice.
Fortunately in the comments section on Hacker News people did notice, rightfully tearing apart the article.
Best of luck finding an investment as safe as US Treasuries (dominated in good ole greenbacks).
With Europe in economic malaise and China’s economy hitting the brakes, it’ll be a long time before US economic supremacy is challenged.
Someone else comments:
Not likely, the US is on the rise again after suffering a decade plus of weakness.
The strong dollar is powering the US economy ahead while most of the world is struggling to stay above water. Americans gained roughly 20-25% in purchasing power against the rest of the world in just the last 18 months. US households have paid down a vast amount of debt in five years, significantly improving their debt to income ratio (while much of the world has done the opposite). Full-time job openings are at 15 year highs. The US share of all global wealth remains above 45%. The US median income remains among the highest of any nation, with no indication of erosion inbound. US economic competitiveness is among the highest, and total US manufacturing output is the highest it has ever been. Economically the US has been persistently getting better the last three to four years. The US is also about to enter a significant wage increase cycle that will see the standard of living move upward for the first time since the late 1990s.
By comparison, China is a disaster; Japan is stuck in the same hole it has been in for 25 years with ‘deflation’ (debt) continuing to eat away at their economy; Europe hasn’t seen net GDP expansion since roughly 2007, with the Eurozone having twice the unemployment rate of the US, and with the Eurozone QE program failing to boost growth meaningfully.
Further, US neighbors Canada and Mexico both have done tremendously well over the last decade and will continue to, which will act as a multiplier for the US economy.
All of this is true….compared to the rest of the world, America’s economy is doing pretty well, as I explain further here: Evidence That America Is Not In Decline.
Post-crisis US GDP growth is trouncing other developed countries:
And since 2014, the US dollar has trounced its peers:
The left, as part of their ‘anti-America’ agenda, want to believe that primacy of the US is unsustainable due to wealth inequality and other imagined problems. But, despite the left’s pessimism, the rest of the world apparently cant get enough of America, as I explain Wealthy foreigners bought $100 billion in US real estate:
So much for the ‘post America’ era that many leftist pundits predicted in 2008 and 2009 – the exact opposite has happened. From surging stocks, to the unending inflow of foreign capital, to a strong dollar, America has been emboldened, it’s economic hegemony only strengthened in recent years compared to the rest of the world, with the exception of China and India, which has fallen behind or stagnated. America is not just pulling ahead of the rest of the world, it’s running victory laps. As middle-America, bombarded with doom and gloom from the sensationalist media, gripe about the lousy labor market, flat wages, and America’s ‘best days being behind it’, rich, high-IQ foreigners can’t get enough of America, buying-up America’s most valuable real estate in the epicenters of intellectualism and wealth creation, Manhattan and Silicon Valley, and inundating America’s most prestigious schools and tech companies with applications.
Since 2008 or so, we’ve seen the rise of the West and the decline of the rest. But why is this? Maybe because America, through its free market, rewards high-IQ and innovation more so than other countries, which tend to be corrupt, inefficient, and socialist (or at least worse than America). If you’ve ever been to a a liberal-leaning foreign country, you’ll immediately notice how lackadaisical everything is, and that is because there is little accountability, unlike in America where employees are under a lot of pressure to perform good service or risk getting fired in the competitive job market. America, more so than most countries, values competence and quantifiable results.