James Surowiecki elegantly encapsulates yet another economic trend, this time it’s the falling-yet-floating dollar. Essentially the dollar is falling because Americans don’t save and keep spending, accumulating incredible debt, and the dollar is not crashing because Americans keep buying… from Asia, who is interested in buying lots of dollars to prop up our currency and our spending habits.
So if no one panics, we’re alright for a while. But once the US population pyramid flattens out, we’ll have less spenders and more older adults wishing they had saved. And then maybe Asia won’t view us as such a great candidate for subsidies.
I was talking to Monika and Ulrike from Germany last night and that country has the reverse problem: a lot of saving and not enough spending. Compared to the US, it seems their habits favor long-term stability and short-term pain.