Why am I optimistic about the USA

In the wake of the great financial crisis of 2008, a number of gloom and gloom began to predict The collapse of the US dollar.

The Fed was “printing” trillions of dollars.

Interest rates have never been this low before.

It was an engaging story if you were someone who was caught in the negative feedback loop of the biggest economic meltdown since the Great Depression.

In recent years, it was crypto extremists who began to anticipate the end of The state of the global reserve currency for the dollar.

Unfortunately, the US dollar is stronger than ever. Here against the currencies of other large developed countries this year (via The Wall Street Journal):

It’s not just this year. The dollar has skyrocketed for years now:

Now it is important to remember that currencies, in general, are cyclical.

You can see that the dollar has gone almost nowhere against a basket of other advanced market economy currencies over the past five decades or so:

In other words, a basket of other advanced market economy currencies over the past five decades or so has gone nowhere against the dollar.

But the main conclusion here is that every prediction of an imminent collapse of the US dollar was a terrible bet.

Could the dollar ever be surpassed by another currency or its digital equivalent?

naturally.

But the complete collapse of the US dollar?

This seems unlikely to me anytime soon.

why?

Well, this country has an abundance of natural advantages over the rest of the world that help give us global reserve currency status.

Let’s calculate the ways:

There are no natural heirs to the throne. In the 1980s, it was Japan that would overtake the United States as a world power.

This didn’t happen.

Now China is nibbling at our heels.

China has experienced tremendous economic growth in recent decades and has over a billion people.

But look at Demographic view of China:

Economic growth is basically a function of population growth and productivity.

China may be in trouble in the coming decades.

geography. European countries are a short distance from a crazy dictator who went to war for no reason.

We have a large ocean to the east, a large ocean to the west and friendly neighbors to the north and south.

We control consumer technology. The internet and smartphone are two of the biggest innovations of the last 50 years or so, and these technologies are dominated by American companies.

We have Apple, Amazon, Facebook, Microsoft, Google, Nvidia, and more.

Not to mention how a company like Tesla has forced the entire auto industry to completely change its business model moving forward.

energy independence. Europe In the midst of one of the worst energy crises they have ever faced. European citizens face extraordinarily high energy bills at a time when there aren’t many great solutions.

The United States is not immune to rising energy prices, but we are in a much better position than our neighbors across the pond. We have a lot of oil, natural gas and coal.

Nobody likes rising gas prices, but we’re in a much better position than the rest of the developed world when it comes to an energy crisis.

We still have a global reserve currency backed by the most powerful military in the world. Coins are strange when you consider that they are backed in one form or another by faith and not by anything else.

But the US dollar is also backed by a massive tax base along with the most powerful military on earth.

It probably doesn’t mean as much as it used to be if we didn’t have a world war, but it doesn’t hurt to have a military that keeps your currency strong.

People still want to live here. Our immigration policies are not perfect at the moment, but people from all over the world still want to live here.

immigrants She has created more than half of all startups valued at $1 billion or more. Nearly 80% of these startups have either an immigrant founder or an immigrant in a C Suite key role.

As long as we don’t screw things up too badly in the coming years, people from other countries will still want to live here and start businesses.

The United States rules popular culture. The world is getting flatter when it comes to entertainment, but America remains the largest source of great professional TV shows, movies, celebrities, music, and sports.

The US doesn’t define every trend in the world, but we have a very solid track record of producing the best content except for none.

(Okay, maybe this guy doesn’t belong on our résumé but it shines on the cake.)

We have the largest dynamic economy in the world. The United States is not dependent on any single industry or commodity like many other advanced and emerging economies.

We have the largest and most diversified stock market in the world. The United States has been around for a few hundred years, but we have been a real power for only less than 100 years.

Just look at The relative size of world stock markets in 1900 And the change since then:

The UK has been through tough times In recent years but they ruled the world for hundreds and hundreds of years.

I’m not sure that many people expected the US to dominate the 20th century as we did.

Is the fall of Rome possible here? Yes, of course.

But it’s not like our covenant has been going on for centuries.

American economic dominance really started in the aftermath of World War II, so we’re talking maybe 70 years or so.

Being optimistic about America doesn’t mean I’m pessimistic about the rest of the world.

On the contrary, I believe that technology has leveled the playing field and provided people in other countries with much more opportunities than in the past.

I am a global bull in the long run because people in other countries will surely wake up every day wanting to improve their standing in life.

But I don’t want to bet against the United States, even if we don’t dominate the twenty-first century as we have the second half of the twentieth century.

In-depth reading:
50 ways the world is getting better