World Economy

China still seems to have a great chasm between rich and poor.  Also, there are the  ethnic problems.  But their 'command and control plus free economy' melange seems to be very powerful.  Perhaps that's a testament to the acumen of the people in charge or just a benefit of a heretofore inexhaustible supply of cheap labor.  But so far it has been truly marvelous.  Something in my gut tells me that a mix of communism and free market would likely be the best economic system.  Maybe the Chinese are working out the percentages of mix that work best for them. I really think that a hundred years down the road we may look back on the birth of a new economic system in China.

And as for the USA.  Being a world reserve currency has its advantages and its disadvantages.  The advantage;  money is free.  Just print it when you need it.   The disadvantage is that free money can make a country feel like it's retired and doesn't have to do anything except enjoy the fruits of its printing presses. 

The cards are stacking up in favor of the US losing its world reserve currency status, just as the British Sterling lost that distinction some years ago.  .Already China is using its dollars to buy up assets in the US and around the world (a smart diversification move).   Eventually all those dollars will find their way back to the USA and we will have a surfeit of dollars over the value of our goods and services.   Then hyperinflation, which will spread to all the countries which have still hold their reserves in dollars.  I suppose the world economy will be destabilized for a while.

Yes, it seems all gloom and doom for my country, yet, all this assumes 'all other things remaining the same'.  In truth, nothing ever remains the same.  America has some big pluses going for it too.   My state, Pennsylvania, seems to be becoming a natural resource powerhouse thanks to the new technology of fracking.   There are layers and layers of shale rich in natural gas  under the state.  This is true for many other states too.  I can see us building gas exportation facilities and providing China with clean fuel.  Fracked wells shoot their load quickly (sorta like a hands free fuck orgasm)...their lives are short.  Extractors have to act on their leases and get wells producing to lock in the lease before it expires.  Companies have invested heavily in these leases.  They have to produce all the gas at once, driving down domestic prices and making export a real consideration.  China would probably love to build the export facilities for us.    We might exchange gas for all the dollars that China holds.  Since they have to become more concerned about the environment, a prosperous China would likely prefer clean US gas to dirty Australian or Chinese coal.

So one can never be sure about what will happen.  It's the way of the universe;  swirling clouds of gasses ever metamorphosing  into new structures in a truly chaotic fashion.  The trick is just to hold on tight and try to enjoy the ride.

Every time I talk economics I feel like Tevya in "Fiddler on the Roof"..."On  the other hand...but on the other hand...but on the other hand."  It's much like spelling Mississippi or Banana.  Easy to spell, but when do you stop....M iss iss iss iss iss ipp ipp ipp ipp i.

In short, sorry for wasting your time with this long post about nothing.  But I did enjoy writing it.