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economic fundamentals are completely and totally out of whack. Our trade deficit is 4.5% of our GDP. This is 3 times higher than any other nation at any other time. Our corporations are just about selling seed-corn for revenue and they're still fixing to not be able to service their debts collectively. Our consumers are borrowing feverishly on the price of their frequently over-priced houses in order to make their expenses. Our government is fixing to borrow massively as well. We have what classical analyses of the stock market and the real estate market to be a large bubble that people are dependent upon to finance borrowing. A bubble, meaning that the stated value of the stocks and of the real estate is larger than what appears to be the value by other measures, so borrowing on this higher value can be problematic should the stated price correct. So, all fundamentals are ripe for catastrophic economic events that would result in depression difficult to reverse. However, the federal reserve is very powerful and works world-wide with a clique of banks and governments. They will shelter us from these problems by making the bubbles bigger, by deception, by thievery, by currency manipulations and by whatever means. Optimistically, we'll just have continued slow erosion of the real standard of living for the majority of our people, but no sudden disruption, because our leaders will shelter us from the worst possible consequences of their folly.

But we've had some bad fundamental economic policies for a long time that are doing a lot of damage. The chinese yuan should float relative to the dollar if we're going to trade with them on this scale, and yet it is fixed artificially low. Not only that the US dollar is over-priced inherently because of its unique role as international trading currency. The chinese refuse to buy american food. So, the end result of all this is market forces shut down production inside of the US, but we are still enabled to borrow.

The clique in charge wants the US dollar to be the super-currency. This is good for the top 15-20% of americans in that they can buy anything they want with valuable US dollars. But in time this harms the rest of americans who work in job market that involves competition with those who produce in foreign countries. Economic catastrophe usually doesn't matter to anyone until it happens, then it matters to everyone.

America should not only require chinese yuan to float freely. It should also develop a new currency. The US should use a domestic US dollar for internal use and let the existing US dollar be used by anyone who wants to use it. If this domestic currency floats, then it will decline in value relative to the current US dollar. This would be good for american producers. In the long run we can't finance social security, medicaire and much else unless we have good production in the domestic economy. with our currency being artificially high, with the yuan being held low, we are going to gut production inside of the US.

I think it would be better to have the disruptions and clear out the ruling clique and start over. But, sadly, the ruling clique is very good at crisis control.

Our trade deficit is 4.5% of our GDP. This is 3 times higher than any other nation at any other time.

You're entitled to your own opinion, but not your own facts. Our trade deficit is not 4.5% of GDP. It is not even a third of that, making your "three times higher" statement nonsense as well.

GDP data is here. GDP is running at about $10 trillion per quarter.

Trade deficit data is here. The trade deficit is running about $38 billion a month.

Annualize both and we get (38B * 12) / ($10000B * 4) = 1.14% of GDP.

Our trade deficit is 4.5% of our GDP. This is 3 times higher than any other nation at any other time.

I agree with you that the US current account deficit is a huge problem with a painful solution. Just to set the facts straight, I believe that other countries have run current account deficits in excess of 4.5% in the past, during the Asia Crisis in the late 90s for example (note that the countries running these deficits all ran into big time problems). There is a belief that economies get into serious trouble when the current account deficit hits 5%.

The US is a unique case because it is so large. At the current rate, we need to attract over a billion new foreign dollars every day. If we do not, the dollar falls. The important point is that foreigners do not have to sell their US assets to make the dollar fall, they only have to stop investing new dollars (i.e., funding the trade deficit). As the dollar continues to fall, foreigners take it on the chin and eventually they will begin to sell their vast holdings of US securities, which puts downward pressure on US markets and additional downward pressure on the dollar. Foreign central banks, where the US dollar makes up a majority of their reserves, will also begin to diversify out of US dollars. It is a self-reinforcing spiral. At some point, the Fed will have to raise interest rates and then our debt-laden economy will implode. Where will people turn if they lose faith in the dollar (it's value is based on faith after all)? I believe gold will play a role, and it doesn't need to play that large a role for its price to explode. That's the way it looked to me 3 years ago and I have seen nothing since to change my opinion.