Quote Originally Posted by ClipseGST
If we aren't in a recession yet, we are surely on our way. I recently read an article that discussed what the American economy is built on. When we moved away from building industrial and manufacturing goods, we become a FIRE Economy. The acronym stands for (Finance, Investing, and Real Estate). This effectively took any material value from the dollar being based on solid goods, and gave it more intrinsic value.

Just like the internet boom of the Late 90's, we had a boom in these sectors. Money was spent in these sectors in exorbitant amounts. Well above the actual value of the markets. That's why we saw the stock market rise so high. If I remember correctly, the real estate, and finance markets were overvalued by at least 12 Trillion dollars.

Now that the market has collapsed, the American economy suddenly lost the "make believe" value of those dollars. So now the economy is looking to make up for that money spent. The author stated that the only way to get out of this financial shortfall and recession is to have another bubble that would be in excess of 12 trillion dollars.

In my honest belief, the next bubble will be the: Alternative Power Race. In the next couple of years, you'll see many companies ramp up the production of commercially feasible ways to create power for natural resources and the sun.

Just me 2cents.... and from excessive reading.

Brian
Very good post but I do think the value of the dollar is heavily backed by oil vs finance which in theory.. could be why the U.S government isn't completely opposed to higher oil prices.