Is America Still the Land of Opportunity?
Photo by: stephen.moore
When it comes to investing, is America still the most sensible place to keep your money? This question involves a lot of elements and has no simple answer. There are however, some pieces of conventional wisdom that may deserve a little extra attention.
Is China the Future?
Listening to the media, you would think the ascendancy of the Chinese is all but assured. They are one of the few economies to truly start enjoying an alleged rebound from the economic crisis and were already becoming a behemoth before the latest financial woes. Surely Asia is where the future lies.
What is often forgotten in all of this is that China is not an open society. In the modern era we assume that the wool can’t be pulled over investors’ eyes. China however can easily give out misleading numbers to investors.1 Moreover, because of the amount of their economy that is centrally planned, they can essentially manipulate their own markets very easily. Their current stimulus may largely consist of creating unused infrastructure to keep their populace employed.2
Inflation: The Ugly Contest
Another supposed factor in why our money should be fleeing US Dollars is the hyper-inflation that will be driven by all the stimulus spending. The thinking goes that any kind of recovery in the economy will be coupled with inflation from all the money that’s been printed to finance the stimulus. While this seems reasonable, at the same time it’s been suggested that as much as 40 percent of the World’s wealth was destroyed by the financial crisis.3 With a good deal of that being in America, it seems that we may be able to survive some quantitative easing. (more…)