Some things it's smarter not to take for granted
Jerry Epperson -- Furniture Today, January 9, 2005
We tend to take many things for granted: health care will be available, our economy will grow, our home values will rise and the U.S. dollar will be stable. In fact, our confidence often leads to arrogance. Other countries that suffer severe economic distress and devaluations lack our financial sophistication and controls, or so we would like to believe.
These assumptions must be true, right? After all, our obscene insurance costs and regulatory messes can't drive physicians away, can they? The economy has to grow so we can pay today's debts tomorrow, right? Since most Americans' largest retirement saving is the equity in their homes, homes must rise in price, right? And since everything is measured in dollars, our currency can't really weaken, can it?
These questions all reflect very serious long-term issues that must be confronted.
Our dollar already has fallen to a point that every financial publication has articles discussing the implications. Yes, a weaker U.S. dollar makes our products cheaper overseas and helps U.S. factories, but since imports have grown nearly everywhere, retailers in Europe that used to buy our products are now buying them in Asia.
The currency question has been a nightmare for Canadian and European factories selling into the United States, and since the Chinese yuan is tied to the U.S. dollar, Chinese merchandise is now even cheaper in Canada and Europe than it is in our country! Of course, all this is putting more pressure on China to revalue, and on the U.S. government to support our currency. Most scary? What if we cannot get foreigners to purchase the federal debt that finances our deficits?
We are not ready to buy gold or tulip bulbs yet, but everyone in our industry has a stake in how this is resolved.
And can your home decline in value? Sure it can! Who is going to buy all the huge homes being built today when we 77 million baby boomers retire or move into the old boomers' home? There aren't enough people in Generation X to do it, so home prices (and your savings) could decline beginning a decade from now.
Finally, can our economy shrink instead of grow? Yes, but we doubt it can do so anytime soon unless the global situation deteriorates severely. We are still viewed as the safe haven, the home of education and opportunity, and our currency remains the world standard.
But as the massive baby boom generation ages and goes from being productive to being a burden, our economy will have to make adjustments that could create some unpleasant economic circumstances.
All this is long term, of course, but worth considering ahead of time.
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Some things it’s smarter not to take for granted
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