If anyone did not know already, South Korea, Japan, and many other countries in Europe are now at an advatage in certain industries. These include telecommunications, much faster internet services, and more fuel efficient cars. More importantly, many of these countries have trade surpluses with the United States, while the United States has an ever growing trade deficit. Today, the Euro is rising against the dollar, as are many other foreign currencies. For all my fellow economics majors, this is why.

War--it costs money. Who do you think pays for all this debt? South Korea, Japan, and even China have bought hundreds of billions in United States government bonds lately, which means that either a. they are paid off by taxpayer money, or b. they are paid off by printing illusionary currency. This results in inflation. So, not only are these countries ahead of us in infrastructure and true economic productivity, but your taxes are actually going to pay for virtually free public health care in many of these countries as well, which is ironic, as the right seems so adament about not issuing one at home. In the meantime, their workers will have even more money from not paying for medical costs, which will further boost economic spending and make them grow even stronger. In the meantime, oil prices will continue to rise, which will make the U.S. economy suffer more then these other countries, as they do not all drive SUVs. Due to the huge repayment of interest on the debt, the dollar will continue to weaken even more and more, and sooner rather then later, Asia, and even Europe will find themselves equal, if not more powerful then the United States. Expect this within 15 to 20 years.

Also, most of this growth we keep hearing about here is illusionary. A lot of U.S. GDP growth has occured in the housing industry, which is producing at record levels. However, in reality, one must only look at worker output and wage increases. These have not increased much, and employment has not risen much, if at all. In fact, most U.S. GDP growth today is based on exaggerated LOANS due to a very low interest rate and a very greedy housing industry, which has created even much HIGHER prices for homes despite significantly increased supply. In other words, it is an illusionary bubble. Although foreign markets will suffer from the United States suffering, they are becoming ever more independent as they are beginning to have more and more money to consume their own goods and trade among one another, and invest in domestic markets, instead of foreign.

The economic future is indeed interesting. When comparing U.S to Europe, one clear difference should be noticed. The European work amount is lower than U.S's. The over-all productivity (production per hour) of the western Europe is only couple procents lower than in the U.S, and some countries actually exceeds the U.S in productivy (like France). What it would require for Europe to exceed the U.S GDP per person, is either greatly increased productivity or much increased use of workforce.

Because the global markets, and their tendensies to transfer technology and knowledge, which are the main sources increasing productivity, I would rule out great future differences in the productivity area. Also the employement rate or the average workload on citizens are unlikely to change lot.

I see the both Western Europe and U.S to work pretty much on their optimal limits, considering their work-force. The GDP differences are likely to remaing constant in the future. The greatest future factor increasing the E.U's relative economic strength is the Eastern E.U.'s raise in productivity levels as it starts to reach the developed world's level. This is my guess.

The other thing is, what the U.S is doing to their own economy. The productivity and the gross production are one thing, the flows of capital are another. Both the raise in taxation and the inflation caused by printing money will hurt both U.S citizen's and enonomy. In practice, the printing of money is a transfer of value from the dollar holders (including tax-payers) to the goverment. As an addition to that, all the other people on the globe having dollars in their pockets are forced to pay. The third thing are the loans and the the stream of capital in the private sector. In the future, the foreign investors will have their own increased share of the U.S economy's production. And anyway, the bill has to be paid, before or later, which will take it's own toll.

IMO, the dollar has been the world's ultimate economical scam, still - with no doubt - beneficial for the U.S. I'm not an economist so I cannot even guess, will U.S survive it's debts by simply printing more dollars, or will the foreign investor's get enought of it's disappearing value. The later could cause quite major problems.

- BtD

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"Freedom is the freedom to say that two plus two make four. If that is granted, all else follows."
[George Orwell, 1984]

Option one is simply no workable unless we plan on becoming the next Argentina! The second option is more likely, but on what scale no one can know. Oddly, if they continue to hold dollars in the long run the value should be fine. If they dump them the value will drop, so they are in a bit of a Catch-22. Not as bad as we are, however. I've said it once and I'll say it again. If we don't get our financial house in order (MR. BUSH) we are in very big trouble.

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I wasn't born with enough middle fingers.