[Jensson]

You are wrong, 2010 wasn't enough, and now it is back to worse than 2007, USA is currently consuming goods from other countries and doesn't produce enough to sustain it, and it hasn't produced enough to sustain its consumption for 50 years now. USA is just continuing to borrow from the rest of the world (printing a reserve currency is the same thing as borrowing/taking), shipment after shipment of goods gets sent to USA but little is sent back. This includes services like ads, what you are seeing now is just the effect of USA leeching of the rest of the world.

At some point the rest of the world will tire at working for USA's consumption, I wouldn't be surprised if that crash gets much worse than the great depression.

https://tradingeconomics.com/united-states/balance-of-trade

[BenoitEssiambre]

>little is sent back.

The rest of the world gets US stocks and other assets. The US as been better than average at producing them. It's true that this might not continue forever and there might be corrections at some points but this does not mean a crash.

I'll give it to you that it's probably not an optimal time for more government debt right now but the monetary stimulation and slightly above average inflation had been desperately needed for a long time. Undershooting inflation was causing gridlocks in private markets everywhere.

[throwaway34241]

Most of the economy isn't tradeable though, including major sectors like housing, education, health care etc.

If other countries get sick of buying US bonds, the relative value of the currency might depreciate. But as long as it doesn't happen all of a sudden that might not be catastrophic - other countries having stronger currencies might reduce US imports and increase exports (narrowing the trade deficit). Plus increasing automation might mitigate the cost of manufacturing in the US vs overseas.

[Jensson]

But the cost of all of those things are tied to trade prices. Lets say we halve the value of a dollar, then we effectively halve the salary of every American worker relative to the rest of the world, and also halve the value of the American consumption market. That would massively reduce the stock value of all companies that mainly sells to the American market, which includes most big American companies. It would also mean that skilled workers would no longer be incentivised to move to USA to work since the salary is no longer better.

Or in other words, it could end the American dominance that has lasted since WW2. If it happens slowly enough it wont be a crash, but the American dominance will still end. I see no scenario where USA will maintain its current dominance, the living standards of Americans will get massively reduced and stocks will massively go down, it could happen quickly or slowly but either way it will happen.

[throwaway34241]

I agree that it would affect the US's relative dominance but I don't see why the living standards of Americans would be massively reduced. For things like medical care, housing, education etc those costs are mostly domestic so it seems like the cost of buying foreign currency wouldn't make a huge difference there. The stock market is denominated in USD so at least nominally you'd think it would be OK (although exporters would benefit over importers). Of course it would raise the price of imports, and it looks like imports average around 15% of GDP [1] and exports are around 12% of GDP [2].

So we'd need to manufacture a few % of GDP more in the US for it to balance out. That might make certain things like TVs more expensive, but technology trends have often made those sort of things dramatically less expensive, so overall (and with increased automation) hopefully that wouldn't affect the standard of living too much.

Certainly it might make it harder to attract foreign talent. But hopefully that would mostly be because of increases to the standard of living elsewhere rather than decreases to the US one.

[1] https://www.statista.com/statistics/259096/us-imports-as-a-p...

[2] https://www.statista.com/statistics/258779/us-exports-as-a-p...

[Jensson]

Those are pre pandemic numbers though, US imports just ballooned after they printed money to pay for the stimulus packages while exports dwindled. Without the pandemic things could have been fine for a few more decades, but now things looks way worse. At the moment the deficit is 80 billion a month, or a trillion a year, and the deficit is strongly trending upwards rather than improving as the pandemic ends.