So you think China and Japan are all of a sudden going to change from export driven economies by stimulating domestic consumption? I hope you're right. In the meantime though, what do you think they'll be doing with all those dollars we send them for cheap stuff at Wal-Mart, cars and electronics? Where else will they invest those dollars? What will the Chinese buy to maintain the Yuan peg?
When the price of bonds drop, stock market investors will start seeing things differently as well.
Are you saying that when bond prices fall the stock market always follows? What will cause the bond market to drop, rising interest rates? Are higher interest rates going to hurt both the bond and stock markets? How do you know?
And when the dollar starts sliding again, maybe you will be able to see it, too.
The dollar will start sliding again vs. what other currency, the Euro? In dollar terms the Euro was first offered at about $1.17. It then dropped as low as 80 cents, shot up as high as almost $1.40, and is now around $1.21. Or, are you talking about other currencies?
From Kudlow:
The dollar, in actuality, isn’t really weak. A broader dollar index of 26 currencies published by the Federal Reserve paints a much stronger picture. Since February 2002, the dollar has fallen 14 percent from a greatly overvalued position that deflated the U.S. economy into recession. However, over the last 10 years, this broad-dollar index is basically unchanged. The dollar is at nearly the same point today as it was in 1994. During this period the average inflation rate in the U.S. was 1.8 percent.
You are correct when you state that household net worth is $49 trillion dollars. If the government defaults on it's unfunded liabilities or raises my taxes to pay for it, how does that affect household net worth? It doesn't. How does it affect the value of the dollar? Again, it doesn't.
That chart you posted only considers liabilities and not assets. If I only counted my liabilities and not my assets, I'd be losing sleep too.
As clearly pointed out by expat_panama here (post #278) the federal debt as a percentage of family wealth has shrunk substantially since 1994.
Thanks again for the chart but within the proper context it really isn't as scary as you want to make it. Maybe you'll start sleeping better now.
If you actually believe these two statements are defensible, it is a waste of everybody's time and FreeRepublic's bandwidth to continue the discussion.
"What will cause the bond market to drop, rising interest rates? Are higher interest rates going to hurt both the bond and stock markets? How do you know?
Ditto.
"Thanks again for the chart but within the proper context it really isn't as scary as you want to make it. Maybe you'll start sleeping better now."
For what it's worth: