17-04-2005 11:24									#1
	What happens to the rest of the world if the US economy crashes? Increase Your PM Length

Lets say the dollar drops like a rock, everyone starts calling in loans to the US and not giving any more. So what happens then?

	17-04-2005 11:27									#2
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We're all screwed

	17-04-2005 11:29									#3
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nothning. ****, off, *****.

	17-04-2005 11:41									#4
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Magna takes off

German cars become "over priced"

French wine becomes know as "freedom" wine

and Canada takes out a loan

	17-04-2005 11:58									#5
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economist will tell people it's a bad thing for the world economy as they have when any large country has poor economic performance be it Japan or the US or a bloc like the EU. That's about it. Nothing spectacular beyond the usual economic ripples.

	17-04-2005 12:16									#6
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I shall emerge from the devastated ruins of Washington DC, start a propaganda blaming Amish Mongolians for all of America's woes and become the next Hitler.

	17-04-2005 12:17									#7
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The price of primary resources drops due to lower demand, which means Australia gets shafted.

	17-04-2005 12:17									#8
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Amish Mongolians?

Come on. you are going to need a catagory that fits more than 2 people

how about we persecute CFCers?

or

Gay ppl, much easier, we all hate them any way.

	17-04-2005 12:21									#9
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That's the whole point you see! While the people are busily looking for Amish Mongolians to persecute, I shall gain more and more power until I become president for life. Also, we’ll need to invade Canada or Mexico for some Lebensraum.

Gay people are ok in my book but they will be forced to dress like pirates and say "Ar, Matey" once a day.

	17-04-2005 12:25									#10
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Aren't they already?

	17-04-2005 19:54									#11
	Re: What happens to the rest of the world if the US economy crashes? Support Apolyton

quote: Originally posted by Lancer Lets say the dollar drops like a rock, everyone starts calling in loans to the US and not giving any more. So what happens then?

all of our creditor's debt instantly becomes worthless, so they can no longer rely on it to pull them out of trouble as Japan did.

Any number of countries have set themselves up on the export to America model of economic growth, they are all thusly boned.

theres probably some other bad effects as well.

	17-04-2005 20:10									#12
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Somebody wake Imran up! He's our resident econ. major.

	17-04-2005 20:16									#13
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quote: Originally posted by Comrade Tassadar The world converts to communism.

	17-04-2005 20:31									#14
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Not as much as people think. Canada will be screwed. People will just find other countries to swap stuff with.

	17-04-2005 20:35									#15
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The USA is a major source of demand for the entire world, and so a complete crash of the US Dollar would sent demand for foreign good plummeting, which would be a pretty huge hit for the world economy. On the other hand, US exports would become much cheaper abroad and so they would be able to import comparative disadvantage good from the USA at a much cheaper price.

	17-04-2005 20:49									#16
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Foreign pension funds would buy all US assets in $ for peanuts and Americans would rebuy them at premium price when the economy recover; and all foreign retirees would enjoy lavish pensions financed by american work.

	17-04-2005 21:11									#17
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quote: The USA is a major source of demand for the entire world, and so a complete crash of the US Dollar would sent demand for foreign good plummeting,

A lot of this is due to the dollar's functioning as a reserve currency. If it went down, it would no longer do so, and the Euro or a combination of other currencies would take its place and the demand would shift.

This is going to have to happen sooner or later for political reasons: you're just too profligate and untrustworthy.

	17-04-2005 22:24									#18
	Re: What happens to the rest of the world if the US economy crashes? Inflate your Upload Space

quote: Originally posted by Lancer Lets say the dollar drops like a rock, everyone starts calling in loans to the US and not giving any more. So what happens then?

As the world economy plummets the leaders of the world gather in meetings to decide what can be done. Agreements are made to bolster the US economy, essentially granting the US more power and control.

	17-04-2005 22:25									#19
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"Any number of countries have set themselves up on the export to America model of economic growth, they are all thusly boned."-Whoha

This is kind of what I figured...but it's interesting to see that many think otherwise. I hope the world could go on without us...

I wonder what the US government would do?

	18-04-2005 00:54									#20
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Depends how quickly the Chinese and Japanese stop supporting the dollar. If they stop immediately, then not that much. Many exporting countries lose quite a bit, but don't go bankrupt. Worldwide recession, but not a particularly serious one.

If East Asia tries to prop up the dollar, they lose a *lot*, so probably half the banks there go bankrupt, the government has to bail out and their economy suffers seriously. Slightly larger knock on recession.

Either way, Europe doesn't do too badly. Less trade, sure, but not much change in the balance of trade.

	18-04-2005 01:06									#21
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Same thing that happened last time, the world economy crashes.

We buy more than $60 billion a year more than we export. You can't afford to let us go under, and you need us to keep borrowing. Yer kinda screwed either way.

	18-04-2005 01:14									#22
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60 billion a month. 60 billion a year would be peanuts.

	18-04-2005 01:16									#23
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The US trade deficit with europe is only ~120 billion p.a.

That's only slightly more than 1% of europe's GDP...

	18-04-2005 01:18									#24
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quote: Depends how quickly the Chinese and Japanese stop supporting the dollar. If they stop immediately, then not that much. Many exporting countries lose quite a bit, but don't go bankrupt. Worldwide recession, but not a particularly serious one. If East Asia tries to prop up the dollar, they lose a *lot*, so probably half the banks there go bankrupt, the government has to bail out and their economy suffers seriously. Slightly larger knock on recession. Either way, Europe doesn't do too badly. Less trade, sure, but not much change in the balance of trade.

That sounds about right. It seems to me that dumping the dollar is increasingly the path of least resistance. I think the Japanese would be more reluctant than the Chinese to dump it.

	18-04-2005 01:22									#25
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quote: We buy more than $60 billion a year more than we export. You can't afford to let us go under, and you need us to keep borrowing. Yer kinda screwed either way.

But you also export dollars and receive goods back in exchange. Europeans pay you in goods for the privilege of holding dollars. If the Europeans stop buying dollars and buy Euros instead, then that will just mean that they are no longer giving you guys a freebie.

	18-04-2005 01:23									#26
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quote: Originally posted by Agathon Not as much as people think. Canada will be screwed. People will just find other countries to swap stuff with.

There's a tremendous amount of drag that you are ignoring. Something like that would take at least a decade to occur if there were any movement in that direction at all.

	18-04-2005 01:24									#27
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asia and canada, on the other hand, might be in trouble.

	18-04-2005 01:27									#28
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quote: There's a tremendous amount of drag that you are ignoring. Something like that would take at least a decade to occur if there were any movement in that direction at all.

Sure, but it will be worse for the US than for the other countries. If your dollar sucks, and your government is trying to use it to freeload off of the rest of the world, what's the point in trading? You no longer have what they want.

	18-04-2005 01:27									#29
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quote: Originally posted by Agathon quote: We buy more than $60 billion a year more than we export. You can't afford to let us go under, and you need us to keep borrowing. Yer kinda screwed either way. But you also export dollars and receive goods back in exchange. Europeans pay you in goods for the privilege of holding dollars. If the Europeans stop buying dollars and buy Euros instead, then that will just mean that they are no longer giving you guys a freebie.

The purpose of exporting to the US isn't to hold dollars. It's to create growth and stability in their own economy because their domestic economy isn't strong enough.

	18-04-2005 01:28									#30
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I don't understand anyway. If China moves to Euros as a reserve, then the Europeans will have to spend the money they receive for the Euros (I can't see the point of sitting on a pile of yuan), so the goods that went to the US will now go to Europe, since the Europeans can now afford them.