SYDNEY (MarketWatch) — Commentators take it for granted that relatively unfettered global trade in goods and service and free movement of capital is a given. But the reality nowadays is far more limiting.
If current economic pressures lead to a shift to autarky, the U.S., Europe and China are likely to find closed economies a realistic policy option, although for different reasons.
Three years after the Dow dropped nearly 1,000 points in minutes, fears of a repeat occurrence are still omnipresent. Steven Russolillo reports on MoneyBeat. Photo: Getty Images.
Forthcoming articles will address Europe, China and smaller countries. Here, I look at the U.S., which unlike so much of the world could function successfully as a closed economy.
The U.S. remains the world’s largest economy, representing around 25% of global gross domestic product. Its GDP is almost twice that of China, the second largest economy.
America’s economy has access to a large domestic market. It is less exposed to trade (around 15% of GDP) than other large economies. Reliance on trade is even lower if trading with Canada and Mexico under the North American Free Trade Agreement (NAFTA) is excluded.
Despite inequality in the distribution of income, America remains relatively wealthy, with per capita GDP of around $50,000. This is among the highest in the world especially when low population (Luxembourg, San Marino, Singapore) or commodity-rich nations (Middle East oil producers) are excluded. By comparison, China’s GDP per capita is around $5,000-$6,000.
American households have substantial net worth in excess of $70 trillion, although that is down from a peak of more than $80 trillion before the financial crisis of 2008.
Moreover, the U.S. remains a major food producer, with agriculture being a major industry. It is a net exporter of food, controlling almost half of world grain exports

The U.S. is also rich in mineral resources. Historically dependent on oil imports which make a substantial part of its $600 billion trade deficit, the U.S. now is cutting imports and establishing greater energy independence through increased production of shale gas and oil.
New technology has enabled America to access oil and natural gas, especially shale gas, from previously geological formations that were previously inaccessible.
While complete U.S. energy independence is not likely in the near term, and some of the claims for new energy sources are overstated, the increase in domestic production provides America with a significant advantage through competitive energy costs. Reduction in energy imports also reduces the country’s reliance on foreign suppliers. The U.S. dollar remains the world’s reserve currency, with a market share of around 60% of global investments. The majority of global trade continues to be denominated in dollars. Even better for Americans is that the U.S. borrows in its own currency, benefitting from a ready market for its securities, both domestically and internationally. Around $5 trillion of Treasury bonds are held by foreign investors, mainly in China, Japan, Asia and the Middle East

579 the total USA debt is over $60 trillion, their unfunded liabilities such as Obamacare and Govt pensions is $167 trillion. So you say they have a net worth of $70 trillion. Not possible. China has now surpassed the USA as the No 1 world economy. They have far less debt and enormous productive capacity.

http://www.forbes.com/sites/realspin/2014/01/17/you-think-the-deficit-is-bad-federal-unfunded-liabilities-exceed-127-trillion/

http://rt.com/usa/166352-us-total-debt-sixty-trillion/

Australia's total debt is $5 trillion and the USA is 12 times this. We are on par with the USA in total debt but better off on Govt debt. Our Govt debt is 40% of our GDP while the USA is 110% of GDP. Our debt has mainly over inflated our house prices. There was little correction in house prices in 2008.

It is the creation of new money by private central bankers like the Rothschilds which has created this mess. When inflation grows via debt, exponentially more money must be created each successive year to pay for the debt of previous years. We are in a death spiral of the beginnings of hyperinflation.

"Aidan you have not addressed the repeal of Dod Frank Bill thus putting the tax payer on the hook for Wall St Derivative Gambling. You also have not addressed " Bail in".ie Confiscation of bank deposits."
Arjay I'm not going to bother addressing trifles like that, and I've already discussed with you why you're wrong about what "Bail in" means.

"When the US $ collapses we will follow."
What precisely do you mean? Do you really think that there will be hyperinflation in America (despite the huge amount it exports)? How far do you think we would follow and why?

"579 the total USA debt is over $60 trillion,"
What any country owes to itself is rarely if ever a problem.

"their unfunded liabilities such as Obamacare and Govt pensions is $167 trillion"
Money America owes Americans. So their taxes may have to rise. So what?

"So you say they have a net worth of $70 trillion. Not possible."
Considering all the high value activity in that country, it's entirely possible.

"China has now surpassed the USA as the No 1 world economy."
Not by any measure that matters!

"Our debt has mainly over inflated our house prices."
No, our debt has enabled great investments to improve our productivity. But because of a lack of significant taxation of land value, it has also had the side effect of increasing house prices.

"It is the creation of new money by private central bankers like the Rothschilds which has created this mess."
Apart from the arguable case of the USA, can you (with proper evidence, not just a claim from a nutty conspiracy site) name even one country that still has a private central bank?

"When inflation grows via debt, exponentially more money must be created each successive year to pay for the debt of previous years."
Except that the money is already in the economy.

"We are in a death spiral of the beginnings of hyperinflation."
So how come the inflation rate is so low?

With some heads buried so far in the sand all one can do is patiently wait for what is inevitable then say "I told you so".

Atjay and Aidan have destroyed the credibility of Janet Yellen and yet Philip S only has his head in the sand along with all the other sheep. Surely if we believe what we are told there is only one alternative and that is to buy Gold with our ears pinned back.
The problem is dishonest money. Federal Reserve officials are free to print as many dollars as they wish, completely unaccountable for the purchasing power stolen by legal fiat.
Honest money in the form of physical gold is the solution. Gold coins, bars, and rounds represent value that cannot be inflated away. In the long run, no other asset offers the same track record -- particularly during turbulent times. Families who save using private, portable, and enduring gold have been passing wealth from one generation to the next for literally thousands of years.