The ground is shaking; the world is braking, as we enter a new era.
The balance of the global economy is fragile and constantly changing, but now we ourselves are on the verge of a major power change. This change is so comprehensive and great that it will affect every aspect of our lives. I’m talking about the eroding power of the greatest empire of the modern world: the United States of America.
Losing Money in Iraq
In this article, we’ll discuss how and why the world is moving in this direction, if it is inevitable or if we can fight to maintain the USA’s position as a spiritual, cultural, and economic leading force and if these changes are for the best or if it is just the dawn of total chaos in the world.
It’s well known that America has declined in its status as the leading force in the world over the years. The USA is like a sinking ship; the only problem is that in a global world in which we live this ship is tied to all the other ships.
But what caused the bubble to burst in our face so suddenly one year ago. In my opinion there are several major failures or unwise economic behaviors that brought us to this point, yet, at the time, many of these actions seemed so right
The first reason is the horrible terror attack of September 11th. This unprecedented event was the trigger to a chain of events such as the change in the paid interest rate direction—it decreased in order to help the market pull out of the economic stress and overcome the uncertainty that followed the September 11th. This greatly damaged the economy because people tend to take more loans when the interest rate is low in order to invest or consume. Because the American tendency is to consume, many people took loans in order to continue buying goods they could not afford.
The USA is not a leading supplier of goods, because comparative advantage of the USA lies in a highly qualified work force and not in industry products. And so, the USA began to import more and more products from other countries, especially China. This ultimately caused the dollar’s value to drop, especially against the Chinese Yuan.
On top of this, the USA had to fund the war in Iraq that cost a lot of money and had many logistic and economic problems. In addition, it has to find a way to confront the new terrorism threat, which is also money consuming.
It seems clear that the age of US economic hegemony is over. The implications for its cultural and political dominance remain unclear. Perhaps the US should look towards former colonial titan Britain as a model—the former empire knows a little bit about how to handle the end of an era.
Omri.
The CEO Game.
October 10th, 2009 at 5:02 pm
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