US National Debt Chart / Weak Dollar

[Dan.Linehan]

This is just an interesting pic I found about the US national debt.

Debt Chart by President

I had some friends visit from London this week; they kept making fun of how cheap everything was. The Pound is so strong compared to the dollar that they said it everything was about half priced, and they were visiting Marin, the wealthiest county in the US.

sigh.

[Cassie]

It's sobering, isn't it?

I live in the States near Niagara Falls and my city is in the unique position to benefit from the declining dollar, as myriads of Canadians pour over the border and shop themselves senseless here.

I'm disturbed by the longterm affects of a weakened dollar and how our nation's billion dollar deficit will impact our economy in the coming decades.

[Gene]

Originally Posted by Cassie

It's sobering, isn't it?

I live in Asia and earn my income in Dollars. My purchasing power has declined by forty percent in the last two years. It is a real and serious reality for those on more limited budgets living the expat life.

[Groundless]

So, let's discuss where this is heading and the logical conclusions.

The dollar is weaker and will continue to get weaker for a while. How long will this last? Why?

This is exacerbated right now by sub-prime lenders going out of business and more people unable to pay back their loans.

Will the US become the cheap labor of the world? What does this mean to the "American Dream"? What can you do about it?

My investments are doing excellent thanks to a weakening dollar. This was easily seen and predicted. No one believed or was willing to believe it though even 3-5 years ago.

[Brutha]

The dollar is weaker and will continue to get weaker for a while. How long will this last? Why?

Probably at least till the next election. Whether it continues to weaker depends on whether the new president thinks making more debt is a wise choice.

[cdn2wheeler]

Originally Posted by Groundless

The dollar is weaker and will continue to get weaker for a while. How long will this last? Why?

All things being equal, probably until about 2010. Reason for this is twofold:

1. The current debt and deficit is primarily a manufactured one engineered by the Bush administration. When the proverbial chickens come home to roost - about 2008/2009 - Republicans in the House and Senate will blame the Democratic leadership in the White House and Congress for the mess. They - the Republicans - will count on the fact that many of us have short memories and will forget that it was the Republicans who got the US in the mess in the first place. They'll try to use this to their advantage for the mid-term elections in 2010. Whether they'll be successful or not is still an open question, but no matter who comes out as the winners in 2010, they will massage fiscal and monetary policy to strengthen the US greenback;
2. The sub-prime market shakeup will have settled and the bit players and weak performers will have been weeded out.

Originally Posted by Groundless

Will the US become the cheap labor of the world?

Yes. And no.

Massive immigration influx will provide the business and corporate sector with huge numbers of low-demand, low-wage workers. (Wait to see how the US private sector tries to extricate themselves around issues like illegal workers. Encouraging illegal workers is good for business because they accept lower wages, but politically and socially it's anathema. The end result of which side the US private sector chooses to support will say volumes about their social conscience.)

Originally Posted by Groundless

What does this mean to the "American Dream"? What can you do about it?

Personally, to me the "American dream" gets more irrelevant by the day. How others live their lives and reach for success doesn't impact on my personal success.

[Groundless]

***Encouraging illegal workers is good for business because they accept lower wages, but politically and socially it's anathema. The end result of which side the US private sector chooses to support will say volumes about their social conscience.)***

I have to admit this made me laugh. I believe (though I have hope I am wrong) this answer is obvious based on how companies are being run.

I don't think it is just a democrat/republican thing. Clinton sure had his own part in the debt escalation. On the other hand, the graph has a lot of republican presidents in it.

In the bigger longer view if everyone around you is poor, poverty stricken and you have money & things, you will need to care. These things tend to get out of whack and then there is a correction of some kind. These corrections can be painful to the "haves".

Good points though, thank you.

[cdn2wheeler]

Originally Posted by Groundless

I don't think it is just a democrat/republican thing. Clinton sure had his own part in the debt escalation. On the other hand, the graph has a lot of republican presidents in it.

Actually, the debt during the Clinton watch actually decreased. From Yahoo News

US debt had declined during President Bill Clinton's last four years. Some budget experts say Bush has missed a historic opportunity to improve the nation's fiscal position.

There's also a graph here which shows the debt as a function of administration from 1950 to projected 2008. You're certainly right about how poorly the Republicans managed the national debt. Seems that the myth of Republican fiscal responsibility simply doesn't match up with the facts.