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Discussion Starter #1
After reading Crash Proof 2.0 and learning of America's Demise - I have two questions:

1) How much will we be affected and for how long.
2) Will American inflation impact us?

I get the impression from reading both this and Game Over that the Authors are still bullish on the Canadian economy as being a safe haven for investment.

Thanks for your input!
 

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Discussion Starter #3
I absolutely and whole heartedly agree with the ideas in the book.

I mean if you take a step back and look at a society where-
- Some how people can live like kings forever on credit
- Never save money
- Spend like mad and get away with it

It completely knocks common sense on its head. Assuming non-political interference, a correction completely makes sense.

It makes no sense that people in China work their asses off and create stuff and live like paupers and people in America relatively do the opposite.
 

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It completely knocks common sense on its head.
The problem is, as I remember reading in The Economist magazine some years ago, the world does not run on common sense. There are lots of things that common sense tells you shouldn't work, and yet they manage to muddle along just fine for centuries. My guess is that rumours of America's demise are greatly exaggerated.
 

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My guess is that rumours of America's demise are greatly exaggerated.
American capitalism is already dead, has been dead for a while now.
The trouble is it is very hard to accurately pin-point when a particular economic system "dies".
It is not a precise mathematical event where you can point and say "there, that's the point that this system dies".
Rome wasn't built in a day, and neither did it crumble in a day.
The Russian empire didn't crumble in a day or even in a year.
The Soviet communist system didn't die in a day, it took decades.

The issue with American capitalism has been for a while that they have stopped innovation.
Innovation is the key to sustaining and continuing capitalism.
Look up the process of "creative destruction" by J. Schumpeter for an explanation of how the beast of modern capitalism sustains itself.
The USA has been so drunk with its success and prosperity that it has forgotten how they attained that success and prosperity in the first place.
It was not attained by over-consumption of frivolous goods like consumer electronics, luxury bunglows, fancy cars, etc.
It was attained by very hard work, constant innovation, improvement, and the "discovery" of new industries, products, processes, etc.
The USA between the 1850s (to pick a random date, but fairly in the range of time when the USAs march to progress began) and the USA post 1970s is a very different society.
They got intoxicated with their success and said to themselves "hey, we figured it out. We can consume, consume, consume without ever stopping, simply by getting our consumer goods produced cheaper and cheaper abroad.
It began with cars then spread to other types of manufacturing and now at a point where even a bottle of water is "Made in China".
Their people got lazy, their politicians got corrupt, their bankers got greedy and the masses in general simply stopped caring.

Sure, the US stock market will "recover", S&P 500 will hit 5,000 or 10,000 or some such arbitrary number but there is no innovation, no advacement, no progress coming out of the USA.
 

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I get the impression from reading both this and Game Over that the Authors are still bullish on the Canadian economy as being a safe haven for investment.

Seriously please explain to me how the canadian economy which depends on the US for 80% of our exports is going to be OK if they implode. Whoever thinks this has their head up their ***. They are our major trading partner.

I mean if you take a step back and look at a society where-
- Some how people can live like kings forever on credit
- Never save money
- Spend like mad and get away with it


Certain people have always lived like this. This is not a new human disease that just started. Far back in the mists of time there were pauper's prisons just to address this problem. This is why in our society we have all these social systems that meter out money monthly to seniors or even bimonthly to families that are on social assistance. Because some people are unable to manage their money and will never be able to. Roosevelt was surprised to learn the 50% of people have below average intelligence. So if this idea is presented as new in our society that is patently false.

We have been having booms and busts since Tulip Mania in the 1600's.

http://en.wikipedia.org/wiki/Tulip_mania
 

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"Sure, the US stock market will "recover", S&P 500 will hit 5,000 or 10,000 or some such arbitrary number but there is no innovation, no advacement, no progress coming out of the USA."

If that were true...then which country in this world is innovating?
Last time I checked, Google, Apple, Microsoft is american. American companies are taking the lead on alternative energies. When was the last time any innovation in any field came from another country other than america?
 

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For instance the Large Hadron Collider is in Cern Switzerland.

http://www.lhc.ac.uk/about-the-lhc.html

Germany is a world leader in installing solar power cells.

http://en.wikipedia.org/wiki/Solar_power_in_Germany

In overall crimes (the total of all mentioned crimes), US ranks the highest, followed by Germany, United Kingdom, France, and South Africa.

http://www.nationmaster.com/article/Crime-Rates-Around-the-World

Also a lot of the "innovations" in technology may be paid for and bought by large US companies but the developement of these products does not occur in the US but rather in the Pacific Rim where the manufacturers are. In fact almost all innovations in manufacturing occur there.

The US is a big gorilla constantly flexing it's muscles and pounding it's chest and telling everyone how great it is. There is no need for us to jump on their self aggrandizing bandwagon.

Some parts of the US are similar to a third world country. The United States has the highest documented incarceration rate in the world. The U.S. incarceration rate on December 31, 2008 was 754 inmates per 100,000 U.S. residents. The USA also has the highest total documented prison and jail population in the world.

http://en.wikipedia.org/wiki/Incarceration_in_the_United_States

Feel free to note that some states have illiteracy rates of 22%

http://nces.ed.gov/NAAL/estimates/StateEstimates.aspx

Ok I'm going to stop now. My point is that yes the US produces great things but they would be well served to pay attention to their own very serious social problems
 

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"Sure, the US stock market will "recover", S&P 500 will hit 5,000 or 10,000 or some such arbitrary number but there is no innovation, no advacement, no progress coming out of the USA."

If that were true...then which country in this world is innovating?
Last time I checked, Google, Apple, Microsoft is american. American companies are taking the lead on alternative energies. When was the last time any innovation in any field came from another country other than america?
There's never been an innovation outside the US?? Are you serious? Or perhaps seriously deluded? Of course there have been several.

Obviously Americans haven't completely quit creating or even producing products, but most of the actual work is done elsewhere. Fact is the US became a net consumer rather than a net producer (exporter) a number of years ago. Europe did the same, others before. China will do the same as well. It's all part of the natural cycle. This is not a case of mass corruption or shocking falls from power, but rather the nature of the beast. Which BTW started well before any Tulip Mania. ;)

America's demise has begun, but as Brad noted it is greatly exaggerated. Drama creates attention and (hopefully) sales.

On the inflation point yes it will, but only until they quit pricing things in US dollars which will happen in the coming years.

On the Canadian exports point, a net exporter country (which Canada only sometimes is) will export primarily to the major consumer countries, it's irrelevant whether it is the US or someone else such as China.
 

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Berubeland is right if the US collapses we won't be having a picnic here that is for sure. This is why our stock market will get hit along with the US if it was to collapse. Also don't count out the US dollar as a done deal because often the currency turns, at the most bearish or bullish time possible.

Right now there is nothing out there but the US dollar and gold as the safe haven last resort currency. Japan was the China in 1989 and look what happened. China I think could be the next thing for this century but it doesn't mean today. China has a real estate bubble going and has over stock piled commodities and so on. It could be ready to roll over dragging down Canada and Australia with it.

Having said all that the US needs to get real dirty real fast and get real with their deficit and unfunded liabilities. This will take a war on taking back America if the public is up to it. They are completely bankrupt and will need a major deflationary or hyper-inflationary fiasco. If they will not take a hint and put their house in order, my bet is deflation, unless they put the printed paper right into the hands of the public in a big way.

So if you invest long term and don't worry you could have your head smashed into the pavement. It will take a lot of watching to see how things play out and adjust to the changing environment to keep your money safe.
 

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Discussion Starter #12
With regards to Canada being tied into the US economy - I think you might have taken my question the wrong way - I do agree that we will be affected by a down turn in America, i was just trying to figure out by how much.

If we rely on a lot of exports to America yes I think it will hit us. However I'm assuming as we are exporting raw materials that demand will remain buoyant with time. If American exports drop, I assume there will still be strong demand with other countries.

I'm assuming rising future commodity prices will offset any drop in exports to America, by a some amount. That funded with the increase in demand from increasingly more consumer oriented cultures such as China and India.

Going along with the book - I agree that faith in the US for a robust and secure place to stick your money is a legacy memory from when the US was a net producer and not a consumer. When they had an economy backed by gold which was intrinsically worth something. At which point does a country top heavy with debt stop looking like an attractive investment and become a liability that will start defaulting on its loans and bonds.

Yea I do believe human emotion does have an impact on the true direction of where money should flow :)
 

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Right now there is nothing out there but the US dollar and gold as the safe haven last resort currency. Japan was the China in 1989 and look what happened. China I think could be the next thing for this century but it doesn't mean today. China has a real estate bubble going and has over stock piled commodities and so on. It could be ready to roll over dragging down Canada and Australia with it.

So if you invest long term and don't worry you could have your head smashed into the pavement. It will take a lot of watching to see how things play out and adjust to the changing environment to keep your money safe.
I disagree. The facts are out there and the root problems haven't changed. I'll continue to stock up on the safe haven that is gold coins and enjoy the volatile ride up.

Also, I believe China is overstocked with USD and is doing the right thing in diversifying out by constantly buying up natural resources. This is their long-term investment and will make them the winners of the century.

I wouldn't rule out another lost decade (Japan's Nikkei index now has two lost decades) for certain US indices. I'm looking forward to DOW:gold at 1:1.
 

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I actually completely agree with you 1600 that gold will see the 1:2 or 1:1 DOW thing it is just that you have to watch out along the way.

The thing is we have to be careful not to be rock solid and not bend with the screw overs as they come along. Don't forget the US dollar is still the world reserve currency and it can do well along side gold as China burns in the short term.

Everyone is on notice in this savage game as it is played out and that includes you and me. We could be shaken out of our positions and then be proven right in the end but not profit from it.

I have a very open mind and will change if I think I am wrong but most won't and that could include you. Look back at 2008 as gold stocks were destroyed but I sidestepped it with an open mind and listened to the history of crash lessons and then went back in after the carnage. Buy and hold and gold included in the buy and hold will test you in these end times. And just in case everyone thinks I am crazy, end times means big changes as we get to the next norm.
 

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It is in a collapse mode now relative to the CAD and other currencies (not all), but that could change, it sure has before. So I think there is a built in medium to long term assumption in the OPs Q.

The USD relative to CAD has risen and fallen all the time, it is just that the swinging has been very large and fast in the last few years compared to other decades. There was a long period of time when the CAD was close to par with USD.

It is hard to deal with these fluctuations as someone selling to the US, we (company I'm at) have to sell in USD to the US just to keep competitive, so it hurts now, but we will adapt.

Found this graph on http://en.wikipedia.org/wiki/Canadian_dollar:

 

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