Economy and that scary "R" word

[Schneed10]

Originally Posted by hooskins

Right but point two only lasts for a bit. Severe weakening leads to depreciation of the dollar, and in the LR can lead to inflation. Nations will pull out their investments for fear of failure. See Asian nations crisis and what happened to several Latin American countries from 70's-90's. The cycle goes back around.

Just studied this stuff last semester as an International Economics major.

Asian and Latin American countries don't have the underlying resources and skill sets to continue driving profit from investment. The United States is positioned strategically with natural resources and, despite growth in other nations, still contains the most highly skilled and educated workforce in the world. You're right, investment from overseas investors will not last long, but that is the case because American businesses will invest the cash in new products and markets successfully, driving profits up, driving tax revenues to the government up, driving the deficit down, and ultimately strengthening the dollar. The strengthening dollar is what will curtail overseas investment. That's the cycle that will take place in the US, not a downward spiraling cycle, but the typical business cycle we've observed over the past fourty to fifty years.

There's a reason that US government bonds yield the lowest return of all government bonds in the world. It's the most stable economy on Earth, and hence least risky to invest in.

And while we're mentioning academic credentials, BS in Finance/Economics with a minor in math, and an MBA in finance.