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I also agree with Mr. Buffett that the next 100 years for American businesses will be the best....makes me think China won't usurp America anytime soon.

by pwaai 9y ago

nabla9 9y ago
This is wrong way to think it. Next 100 years for American business will be the best if China usurps America and others like India follow. Countries have their comparative advantages, and returns to scale and network effects increase the pot for everyone.
- avar 9y ago
  I fully agree with this thinking in general, countries don't lose because other countries are growing, quite the opposite. However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, and is able to strongarm other countries into accepting its domestic banking laws (through the likes of FATCA). That situation is unlikely to persist for the next 100 years, which is going to be disproportionately bad for the US economy.
  - cheriot 9y ago
    1. We'll get a cheaper dollar that makes US exports more competitive. 2. It will be harder for our government to do things that make the rest of the world hate us. US citizens might be better off with a less powerful government.
  - nabla9 9y ago
    > However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, This is something that is just said and 'known' to be true without people looking into what it means and how big the effect is. It harms US exports (USD exchange rate is artificially high) but it helps US finances. Generally it seems to have slight net positive effect. By no means is it fundamentally important for US economy. In the normal year, the reserve currency effect is estimated to be between 0.3 to 0.5 percent of US GDP. In bad year much less. http://www.mckinsey.com/global-themes/employment-and-growth/an-exorbitant-privilege http://www.mckinsey.com/global-themes/employment-and-growth/...

I also agree with Mr. Buffett that the next 100 years for American businesses will be the best....makes me think China won't usurp America anytime soon.

by pwaai 9y ago

I also agree with Mr. Buffett that the next 100 years for American businesses will be the best....makes me think China won't usurp America anytime soon.

nabla9 9y ago

This is wrong way to think it. Next 100 years for American business will be the best if China usurps America and others like India follow. Countries have their comparative advantages, and returns to scale and network effects increase the pot for everyone.

avar 9y ago
I fully agree with this thinking in general, countries don't lose because other countries are growing, quite the opposite. However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, and is able to strongarm other countries into accepting its domestic banking laws (through the likes of FATCA). That situation is unlikely to persist for the next 100 years, which is going to be disproportionately bad for the US economy.
- cheriot 9y ago
  1. We'll get a cheaper dollar that makes US exports more competitive. 2. It will be harder for our government to do things that make the rest of the world hate us. US citizens might be better off with a less powerful government.
- nabla9 9y ago
  > However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, This is something that is just said and 'known' to be true without people looking into what it means and how big the effect is. It harms US exports (USD exchange rate is artificially high) but it helps US finances. Generally it seems to have slight net positive effect. By no means is it fundamentally important for US economy. In the normal year, the reserve currency effect is estimated to be between 0.3 to 0.5 percent of US GDP. In bad year much less. http://www.mckinsey.com/global-themes/employment-and-growth/an-exorbitant-privilege http://www.mckinsey.com/global-themes/employment-and-growth/...