America Makes an Economic Comeback

For the First Time Since 2007 Wealth has Been Increased

Sep 30, 2009 Paul Hamilton

Those who thought the U.S. was down and out had better think again, according to new statistics released by the Federal Reserve America's financial strength is back.

For the first time in a long time America seems poised to lead a worldwide economic comeback, one that has been a long time in the making. Ever since the rumblings of a global economic meltdown in 2007 and then the full-blown crisis of 2008, many political pundits and economic soothsayers have been doubting the financial staying power of the U.S. But just like in previous difficult times in the countries history like the Great Depression of the 1930's, Americans have had to take a look at ways to make changes in the way they do business. The new participation in the U.S. economy also now includes a change in they way Americans save money, and many have had to take a look at their everyday lives in order to maintain a good quality of life with the reality of less resources.

The G-20 Meeting in Pittsburgh may Signal a new Economic Architecture

According to the G-20 website, "Since 1999, the G-20 has contributed [trillions] to strengthen the international financial architecture and to foster sustainable economic growth and development. The G-20 now has the crucial role in driving forward work between advanced and emerging economies to tackle the international and financial and economic crisis, restore worldwide financial stability, lead the international economic recovery and secure a sustainable future for all countries."

Speaking at a news conference after the G-20 Finance Ministers meeting in London on September 05, 2009 IMF Managing Director Dominique-Strauss Khan said that the G-20 has already participated in "unprecedented cooperation in anti-crisis measures, and the global economy appears to be emerging from the worst financial and economic crisis in the post-war period," Mr. Khan said.

However this most recent G-20 summit in Pittsburgh highlighted proposals to radically reform the international monetary fund and to make the group which gathered in 'the city of champions' the new permanent council for international economic cooperation. Consequently from now on the G-20 meeting will take the place of the much smaller G-8 meeting on economic and financial matters, and will include the emerging economies of China, India and Brazil. The G-8 will still meet to discuss matter related to security issues, but will carry with it a reduced footprint on the world stage.

The U.S. Dollar has Proven to be a Solid Safe Haven

Three reasons the U.S. has been able to comeback according to Professor Michael Hudson, who is currently the president of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author, are made up of three inter-related dynamics which have acted to protect America during the global economic crisis and they include the following:

Surplus dollars poured into the rest of the world for further financial speculation and corporate takeovers.
Central banks are obligated to recycle these dollar inflows to buy U.S. Treasury bonds to finance the federal U.S. budget deficit.
The financing of America's global military build-up and the military character of the U.S. payments deficit and the domestic federal budget deficit.

According to Professor Hudson, countries like China, Russia, Japan and Saudi Arabia have been using their central banks, petrodollars, and investment funds to reinvest their surplus dollars back into the U.S. to help to reignite the U.S. economy. From the purchase of trillions of dollars of treasury bills, to the purchase of Rockefeller Center, to the trillions that will eventually be invested into green energy companies and technology all of this free flow of money has helped to prop-up the greatest economic system among the world's leading nations and with continued G-20 cooperation will remain so for years to come.

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