Macroeconomics or bust

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My sense is that macroeconomics is not a topic that causes spine-tingling curiosity out there. Consider these facts:

  1. What if you were even more squeezed out of the housing market than is likely to currently be the case?
  2. What if a political crisis turned into an economic crisis, China rapidly divested itself of U.S. dollars and the country suddenly found itself in deep guacamole? What if China forced a political crisis on very compelling economic premises?
  3. Did you realize that in terms of consumer debt Americans eat up the equivalent of the GDP or Mexico or Brazil? Brazil, just for point of reference, is the 10th largest economy on the planet.

Here’s a quote from a fascinating article called “Debtor Nation” appearing in Harvard Journal that addresses many of the above-mentioned facts:

The United States, for example, was “the world’s biggest debtor for a hundred years,” Frieden notes, “but the money was used to build the railroads and the canals and the factories and to improve the ports and to build our cities. It was used productively, and it worked. The question to ask now is not, ‘Is the country living beyond its means?’ The question is, ‘Is the money going to increase the productive capacity of the economy?’ Because if it just goes to getting everybody another iPod,” he warns, “then unless iPods make people more productive, there is going to be trouble down the road when the debt has to be serviced.”

Take a look at the article. It makes a very interesting and compelling case for what are the larger consequences of our consumer spending. You can click again, here.

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