So how should the PP behave if the U.S....

[robininni]

How does the PP behave if the U.S. dollar loses reserve currency status? 

How does the PP behave if the U.S.A. defaults on its debt obligations (maybe because it loses the perks of reserve currency status)?

I know the permanent portfolio is an investment for all seasons, but I don't think the thought of the above two seasons existed when the PP was conceived.  Did they?

Has anyone thought the above 2 scenarios through and what effects each would have on the 4 components of the PP?

I have only gold and silver for an investment right now but I am very interested in starting up the PP.  I am also very scared to do so because I wonder if the power of the PP might die if our unprecedented debt/economic situation here in the U.S.A. results in what theoretically should happen at this point.

Thanks,

Rob

[stpeter]

To what currency would the U.S. dollar lose its reserve status? Based on the research I've done, I would say that the U.S. dollar might not be a beautiful currency, but it's prettier than the alternatives (in this context, mainly the euro, the yen, and the yuan). A real gold bug might argue that the yellow metal will return as the reserve currency, and a cypherpunk might argue for an electronic currency such as bitcoin. However, it seems to me that the U.S. dollar will remain the world's primary reserve currency for quite some time. In any case, one can implement a PP strategy in terms of any currency (just because, say, the British pound is not a reserve currency does not mean that someone in the UK can't start a Permanent Portfolio denominated in pounds). Thus I wouldn't let such worries dissuade you.

[robininni]

To what currency would the U.S. dollar lose its reserve status? Based on the research I've done, I would say that the U.S. dollar might not be a beautiful currency, but it's prettier than the alternatives (in this context, mainly the euro, the yen, and the yuan). A real gold bug might argue that the yellow metal will return as the reserve currency, and a cypherpunk might argue for an electronic currency such as bitcoin. However, it seems to me that the U.S. dollar will remain the world's primary reserve currency for quite some time. In any case, one can implement a PP strategy in terms of any currency (just because, say, the British pound is not a reserve currency does not mean that someone in the UK can't start a Permanent Portfolio denominated in pounds). Thus I wouldn't let such worries dissuade you.

Thanks for your reply but you really didn't answer my questions at all.  I didn't want to know how likely/unlikely US dollar reserve currency status is to be lost, but rather what likely effect losing reserve status would have on gold, US cash (or short term US treasuries), US stocks, and US government long term bonds.  Both short term and long term outcome hypotheses would be great.

Same with a US government default, what effect do you foresee occurring to the 4 components of the PP, immediately or otherwise?

Rob

[stpeter]

I didn't answer your questions because (1) I don't claim to have the answers :-) and (2) I don't think it's at all likely that the U.S. dollar will lose its reserve currency status.

However, it seems to me that the U.S. dollar couldn't lose its reserve currency status unless some major changes were to happen in the world -- e.g., if the Chinese economy were to become larger than the U.S. economy, if New York and America in general were to lose their pre-eminent place in world finance, if the American economy were to lose a great deal of its flexibility and dynamism, etc. Those underlying changes would have a greater impact than losing reserve currency status (which in my opinion is a result, not a cause).

[Gumby]

what likely effect losing reserve status would have on gold, US cash (or short term US treasuries), US stocks, and US government long term bonds.  Both short term and long term outcome hypotheses would be great.

It would be foolish to assume that any of us could accurately predict the effects of such an outcome — since none of us can even predict what will happen next month under normal conditions.

Having said that, I think it's important to realize that a country does not lose its reserve currency status overnight. It can take years — and sometimes decades — for another currency to take over world foreign reserves and for that competing currency's country to provide enough liquidity for every nation on the planet to hold it those foreign reserves. It would be difficult to predict what that decade or so would be like. Keep in mind that the British Pound did not implode when it lost reserve currency status and Japan has never had full reserve currency status. The PP has not performed quite as well in those countries, but it's done okay.

Same with a US government default, what effect do you foresee occurring to the 4 components of the PP, immediately or otherwise?

If the US defaulted it would pretty much be the end of modern finance. You don't want to go there. The only thing that would survive that onslaught is gold in the hand (and not in an ETF).

Luckily, the US cannot default so long as there is electricity and Treasury officials and Primary Dealers follow the letter of the law and Congress chooses to raise the debt ceiling. At some point one of those will come to end someday and at that point 25% of your wealth in gold should put you in a good position.

[craigr]

How does the PP behave if the U.S. dollar loses reserve currency status? 

Nobody knows. No currency as widespread as the U.S. dollar has ever experienced that before. If it's gradual it may be not much effect. If it's sudden it could be bad. But the question is if it is sudden where does the capital flow? Euro? Yuan? Gold? Depending on a lot of things it could be good or bad. But the only honest answer someone can give is "I don't know."

How does the PP behave if the U.S.A. defaults on its debt obligations (maybe because it loses the perks of reserve currency status)?

Best to have some gold outside the country because you'll probably need it. To default and not pay any obligations means no social security payments, no medicare, no government wages, no military wages, etc. The repercussions will be quite shocking and unlikely to happen unless there is some kind of serious war going on putting the actual government in jeopardy. IMO.

Always remember too when you read these bad scenarios that it may not work out as people think. For instance people get worried about debt owed to China and that China may dump that debt to hurt the U.S. Well my answer to that threat is very simple: Cancel all Chinese owned debt. And, refuse to pay on any bonds they try to sell to others. It will turn the debt into toxic waste and the U.S. would not need to worry about defaulting on anyone else. Presto, the mythical Chinese-will-destroy-the-US-by-selling-our-bonds threat goes away. This would be extreme of course, but hardly a new idea.

I could go on, but you have the idea...There are many ways bad scenarios can play out and they don't have to be the way someone may think will happen.

I know the permanent portfolio is an investment for all seasons, but I don't think the thought of the above two seasons existed when the PP was conceived.  Did they?

Yes those two scenarios have been around for at least 40+ years and definitely were being thrown around during the time of the Permanent Portfolio. There were a host of inflation doom books from the 70s that made the same arguments. They may be right someday, but it could be another 40 years, or it could be 40 minutes. We don't know.

But we've see various currencies lose worldwide prominence in the past and it was not the end of the world (The British, The Dutch, etc.).

I have only gold and silver for an investment right now but I am very interested in starting up the PP.  I am also very scared to do so because I wonder if the power of the PP might die if our unprecedented debt/economic situation here in the U.S.A. results in what theoretically should happen at this point.

The biggest risk for you by far is we get hit with massive deflation like Japan and gold nose dives to late 90's levels below $300 an ounce. Without stocks, bonds, and cash a gold/silver portfolio has serious negative exposure to deflation. It also has serious negative exposure to prosperous markets where gold is abandoned and money flows into stocks instead.

The main point of the Permanent Portfolio is to never wager too much on any particular future because if that future doesn't happen as expected, you can take serious losses.

[Libertarian666]

If that happened, I would expect gold to go to the moon, not just in dollar terms but in real terms. The stock portion would probably hold its own in real terms, but the response of the bonds and cash would be disastrous to those parts of the portfolio.

This would probably still put you ahead of most people, but it would obviously not be as good as having a greater proportion of gold.

[moda0306]

If that happened, I would expect gold to go to the moon, not just in dollar terms but in real terms. The stock portion would probably hold its own in real terms, but the response of the bonds and cash would be disastrous to those parts of the portfolio.

This would probably still put you ahead of most people, but it would obviously not be as good as having a greater proportion of gold.

+1. Though I don't advocate more gold because I don't think hyperinflation will ensue.

But the collapse of the world's reserve currency would be a huge boost to gold in real terms IMO.

Though I wonder because the massive collapse of production that could ensue could leave little to buy. 

[stone]

robininni's first post poses the awkward situation of what to do with a very concentrated portfolio that has had a bad year. It would be so painful to sell up gold and silver now at seeming rock bottom prices and to buy into stocks that seem very overvalued. But who knows -perhaps gold will fall even more and perhaps stocks will turn out not to be so overvalued after all?????

About reserve currency status- Isn't it true that the USD has been slowly slipping away from being as pre-eminent as a global reserve currency as it once was? I don't think it will be a dramatic event, more a continued slow slipping. Already China has set up bilateral currency swap agreements with twenty other countries. Twenty years ago, most developing countries had USD denominated government debt and/or USD pegged currencies. That is much less the case today.

The GBP/USD shifted about 4x when the USD became the global reserve currency and the GBP lost its last semblance of being that.  http://www.miketodd.net/encyc/dollhist.htm

Silver pieces of eight were the global currency during the period when the Spanish empire was strong (from about 1520 to about 1850).
http://www.bbc.co.uk/ahistoryoftheworld ... episode80/
Looking at the gold/silver price ratio gives some sort of vague insight into how that gave value to silver. BUT unlike silver, even if the USD stops being a global currency it could still have great value simply as being the US currency -much as the Japanese Yen is a currency that has kept value over the past few decades.
If the USA slipped from being the global superpower, it might scale back overseas military spending. That could even strengthen the USD  enough to counteract any slippage due to loosing global currency status. I think nowadays pretty much all of the "exorbitant privilege" that the USA gets from issuing the global reserve currency ends up being consumed by overseas military spending.

[Kshartle]

If the US government annouces that it will suspend a portion of interest payments or principle payments will be reduced, it will probably be after trillions more printed and growing deficits that are obviously unsustainable (as if it's not obvious now).

Yields will most likely rise sharply, but I would think the dollar would strengthen a lot. Prior to the announcement of an outright default, most market participants would probably be under the assumption that the US intended to try and print it's way out of the problem. The spike in interest rates would make additional borrowing very difficult and cause the US to reign in spending and slash it's budgets. If they decided that today it would add a ton of confidence to the dollar in my opinion. The skeptisism about the dollars future is driven by the idea that the government will keep growing it's budgets and deficits and fund them with printing.

I would bet gold would actually fall after such an annoucement, although it would probably have run up an enormous amount prior due to the incorrect assumption that they would hyper-inflate the currency.

If the US actually annouced a partial default and rates spiked I would probably consider buying bonds but they don't look anywhere close to that right now. In addition to double-digit rates you'd probably be seeing deflation and prices for most goods and services dropping so win-win.

Stocks to me would be very scary because of the huge disruption to the economy with the inflation ending and the government getting slashed. This would plant the seeds for future growth though.......

Just my opinion. If anyone wants to poke holes in my line of thinking please go for it.

[Kshartle]

About reserve currency status- Isn't it true that the USD has been slowly slipping away from being as pre-eminent as a global reserve currency as it once was? I don't think it will be a dramatic event, more a continued slow slipping. Already China has set up bilateral currency swap agreements with twenty other countries. Twenty years ago, most developing countries had USD denominated government debt and/or USD pegged currencies. That is much less the case today.

I agree. This is a long-term process that has already started. The Euro now makes up what...25% of more of foreign reserves? Didn't the Chinese rurlers just annouce it's no longer in their interest to keep accumulating foreign reserves? I would think long-term the RMB will make up an increasing amount of foreign reserves as it gains strength. The US has really abused the reserve currency status and exported a lot of inflation.

The very long-term, monthly USD charts look like it's been in a long-term downtrend since '71, with bear market rallies here and then. I think we're in one of those rallies but I don't see anything from the central bank or government that can sustain the rally and change the trend. We'll see.

If you were the ruler of a foreigh county, would you want your savings in USD or a basket of currencies including gold? How long can the US keep the the middle east countries accepting only the petro-dollar? Maybe that's the deal the Iranians are being forced into though......but how much longer?

[Gumby]

Most of these "announcements" of countries shunning dollars are just political theater. China likes to rattle its saber every few months, but anything beyond that tends to hurt their exporters.

A few years ago, Warren Mosler was asked what would happen if the dollar was "no longer the world's reserve currency". He responded by saying...

I need to know what you mean by ‘no longer the world’s reserve currency’ to respond to that. Do you mean the rest of world decided not to hold dollar financial assets and instead buy things in the US with their funds?

Those are their only two choices, at the macro level.

The person who posed the question never clarified. In any case, a ‘reserve currency’ usually means that other countries want to use a particular currency as their foreign exchange reserves. Which begs the question... At the most basic level (Petrodollars aside), why would a country want to own foreign exchange reserves that generally do them no good? Usually it's to support their exports to the region of that reserve currency. You can see the predicament of an exporting country wanting to change that situation — the powerful exporters within that country prefer the status quo.

As Mosler points out, if the world doesn't want dollar financial assets going forward, that implies that exporters don't want to export to the US anymore. It also implies that foreign holders of dollars will instead want to divest of their dollars and buy things in the US, on a macro level — making the US into a net exporter. Maybe that will be the case someday, but I don't think it is right now.

[Kshartle]

As Mosler points out, if the world doesn't want dollar financial assets going forward, that implies that exporters don't want to export to the US anymore. It also implies that foreign holders of dollars will instead want to divest of their dollars and buy things in the US, on a macro level — making the US into a net exporter. [/quote]

Or they just want to get paid for their exports. You get paid when you import, not when you accept paper. There's no use for the paper. The US has been getting free stuff. If countries reduce their paper holdings it's not because they don't want to export, but because they want to import (get paid). There's no point in exporting long-term without importing by an offsetting amount. That's just giving away your stuff for free.

In reality the rulers of the country are making the decision that their home-currency should rise, making their people wealthier by comparison. Would they do this out of the goodness of their heart? I doubt it. I imagine they want to prevent the effects of buying up all those dollars with more printed money.....namely, higher prices and pissed off people.

If countries gradually import less paper and use the paper to buy stuff......our prices will go up as they outbid us for our own production.

[Kshartle]

As Mosler points out, if the world doesn't want dollar financial assets going forward, that implies that exporters don't want to export to the US anymore. It also implies that foreign holders of dollars will instead want to divest of their dollars and buy things in the US, on a macro level — making the US into a net exporter. Maybe that will be the case someday, but I don't think it is right now.

Or they just want to get paid for their exports. You get paid when you import, not when you accept paper. There's no use for the paper. The US has been getting free stuff. If countries reduce their paper holdings it's not because they don't want to export, but because they want to import (get paid). There's no point in exporting long-term without importing by an offsetting amount. That's just giving away your stuff for free.

In reality the rulers of the country are making the decision that their home-currency should rise, making their people wealthier by comparison. Would they do this out of the goodness of their heart? I doubt it. I imagine they want to prevent the effects of buying up all those dollars with more printed money.....namely, higher prices and pissed off people.

If countries gradually import less paper and use the paper to buy stuff......our prices will go up as they outbid us for our own production.

All that being said, I agree that isn't happening too much right now, and we appear to still be in the so-called "currency wars". I don't think this will be a thunderclap but more of a gradual process that has already begun. The dollar has been holding firm for about 6 years now as a "safe haven". I don't think it's based on the merit of our production (since the US is a net importer), nor based on the desire to send us free stuff. There are probably political reasons but how long can those last? Things do seem to last a lot longer than anyone thinks they will.

[Gumby]

Or they just want to get paid for their exports. You get paid when you import... I agree that isn't happening too much right now

I don't think the exporters in these countries see it that way. We are talking about exporting nations that have no intention of "getting paid" for many, many decades — if ever. The powerful owners of exporting corporations like it that way. They help fund/support politicians who will maintain that status quo. They know they can trade the worthless paper for their native currency — thanks to that support from their own crony politicians. Many exporting CEOs live in their own ivory towers and appear to be enjoying their exporting businesses even though they are getting "paper" (really it's "paper" they can easily trade for their domestic paper).

Not saying any of this is a good thing for those nations. I'm just saying that I don't see any exporters who are whining about exporting to the US (they could just stop if they didn't like it). These exporters seem to like their relationship with the US and their politicians just seem to rattle their sabers every few months.

Maybe one day we'll piss off companies like Samsung, Canon and Foxconn — and maybe they'll shun dollars one day — but I don't get the feeling that's happening anytime soon. Their entire businesses are pretty much built on selling products and components to other nations and so they maintain political pressure on their politicians to maintain the ongoing currency wars so that their exports remain attractive.

[Kshartle]

I don't think the exporters in these countries see it that way. We are talking about exporting nations that have no intention of "getting paid" for many, many decades — if ever. The powerful owners of exporting corporations like it that way. They help fund/support politicians who will maintain that status quo. They know they can trade the worthless paper for their native currency — thanks to that support from their own crony politicians. Many exporting CEOs live in their own ivory towers and appear to be enjoying their exporting businesses even though they are getting "paper".

Gumby you are making the same argument I've made here before. It's wonderful to hear that we agree on something else. By God I know we've disagreed on this before, that's fine, water under the bridge. Yes, the rulers are manipulating the currency for the benefit of exporters to the detriment of the importers. The CEOs living in ivory towers are turning their paper dollars into paper RMB and buying real stuff with it. It's a good deal for them, it's a good deal for all their workers, it's just a raw deal for the rest of the people that have to pay higher prices because the gubmit is keeping the currency low and keeping domestic prices high since it's being given away to Americans.

The question is at what point does it become less advantageous for the politicians to appease the vocal & organized minority (exporters) to the detriment of everyone else? There has to be a point where this is reached if you keep escalating. Maybe it's now, maybe not in our lifetime. They did just make that announcement supposedly a few weeks ago that accumulating more reserves was not in their interest. Maybe they're lying and maybe they're telling the truth. Maybe they would like to spend all that moola and exporters be dammed. 

[Gumby]

The question is at what point does it become less advantageous for the politicians to appease the vocal & organized minority (exporters) to the detriment of everyone else? There has to be a point where this is reached if you keep escalating. Maybe it's now, maybe not in our lifetime.

Correct. We agree!

They did just make that announcement supposedly a few weeks ago that accumulating more reserves was not in their interest. Maybe they're lying and maybe they're telling the truth. Maybe they would like to spend all that moola and exporters be dammed.

Well it's probably true that accumulating more reserves is "not in their [best] interest". But, they will probably have no choice but to keep accumulating so long as their top companies are exporting and the populace goes to work every day. So, I think it's just saber rattling. They can't very easily maintain a policy of playing the [export] currency wars while simultaneously shunning foreign reserves.

I mean, I'm sure these exporting countries would love to turn their populace into net importers one day (i.e. run a trade deficit), but if we don't make anything, what are they going to buy? Maybe just a bunch of shiny rocks!

But, in all seriousness, this all goes back to the fact that the next reserve currency will, by definition, likely be generated by the next country to run a giant trade deficit. I suppose a basket of currencies could work as well (instead of Petrodolloars), but I think that the exporters themselves are the ones who decide what currencies they are willing to accept each day and which countries they want to sell to.

[Kshartle]

I mean, I'm sure these exporting countries would love to turn their populace into net importers one day (i.e. run a trade deficit), but if we don't make anything, what are they going to buy? Maybe just a bunch of shiny rocks!

I don't think our production matters. They would start by consuming the full value of what they make, even if that means they have to produce different things. They will still have cash and be able to purchase our stuff or other stuff (gold, oil, food etc.) The effect will be to drive those prices up for us in dollar terms. It will make us poorer though and drive the cost of labor here and people will be willing to do more for less. Maybe someday the Chinese will complain about Americans taking their jobs hah!

[Gumby]

I guess you mean short term because if someone decides to make a product domestically, as an alternative to an expensive import, how does that make us poorer?

Also, I think the robots will take away foreign jobs before we will. Some people seem to think that domestic robots will eventually eliminate a lot of foreign jobs — in which case foreigners won't be able to accumulate as much reserve currency!

[Kshartle]

I guess you mean short term because if someone decides to make a product domestically, as an alternative to an expensive import, how does that make us poorer?

Also, I think the robots will take away foreign jobs before we will. Some people seem to think that domestic robots will eventually eliminate a lot of foreign jobs — in which case foreigners won't be able to accumulate as much reserve currency!

The only way we are poorer for producing something is if we use up time and resources to create something of value, out of componenets of lesser value, and then trade that for paper that we just lock away in a safe (become a net exporter). To the extent items of value get sent out without offsetting value coming in we do get poorer or at least get richer more slowly because of it. That's what's happening to the Chinese. They've wasted so many resources producing for a deadbeat customer (Americans) who can never repay in equivalent value. The only reason we can afford to keep buying is because they essentially loan us the money by accumulating reserves! They keep the worthless paper, with the idea that we eventually pay with real useable stuff. But while they can get the full dollar value....once they start spendng the dollar value will drop.

None of that is what I meant though. I was talking about the dollar dropping in value relative to real stuff because the Chinese are buying the stuff with their saved dollars.

Imagine what they are gonna think if the FED announces it's upping QE to 120 billion a month, or 150 bn. - Actually, NM I think that's been discussed here before.

[Gumby]

Wait, not following… First you said our production doesn't matter if they buy up world resources and their own products (true) but our production does matter if they are going to actually use their dollars. I just don't see what they can really buy with our dollars. And if they could find enough to buy from us, we'd probably have the productive capacity to meet the demand and it would be good for the economy.

[Kshartle]

I just don't see what they can really buy with our dollars that would harm our economy.

Imagine you can never buy anything with the money your employer pays you. Imagine you get dollars, but you can't buy anything with them.

If the Americans make something....and they only get USD paper back from the Chinese, we are worse off. We spent all that time working and they get to enjoy it.

Imagine if they immediately bought 1 trillion worth of stuff. They completely liqudated their reserves. Let's just imagine they were able to sell their Treasuries for the current market value (for ease of argument). Now they turn around and buy a bunch of stuff with the trillion. Maybe it's everything we export for the year and we can't afford any other imports. To the extent Americans still buy foreign stuff the dollar falls because we have to buy the other currency or their central banks get the dollars and sell it to maintain their current reserves.

The end is less stuff for us, wasted effort and just more paper. 

[Gumby]

If the Americans make something....and they only get USD paper back from the Chinese, we are worse off. We spent all that time working and they get to enjoy it.

Imagine if they immediately bought 1 trillion worth of stuff. They completely liqudated their reserves. Let's just imagine they were able to sell their Treasuries for the current market value (for ease of argument). Now they turn around and buy a bunch of stuff with the trillion. Maybe it's everything we export for the year and we can't afford any other imports. To the extent Americans still buy foreign stuff the dollar falls because we have to buy the other currency or their central banks get the dollars and sell it to maintain their current reserves.

The end is less stuff for us, wasted effort and just more paper.

You're still not convincing me because you are using an extreme example — we aren't going to become a net exporting nation anytime soon. So, the example isn't all that relevant to us.

And secondly, we still have high unemployment in this country, so despite the fact that we wouldn't get to "enjoy" the production of more whoopee cushions or pet rocks that get sent overseas (an extreme example of disposable junk), increasing exports can be a good thing when unemployment is high because any unemployed citizen who gets hired to an exporting company now has dollars that they can use to feed their families. The dollars these workers spend then get used to pay down debt and credit and can be used to create demand for other goods and services.

You can't just claim that everything in the world is bad, just because you don't like the system. First you complain that we import too much. Now you're complaining that exporting is bad. Not sure you can have it both ways!

Believe me, I agree that we don't want to become a net exporting nation. I totally see your point for a net exporting nation. But, having some additional exports can be a good thing when unemployment is high (so that people can feed their families, for example). And finally, just because the Chinese government has a stockpile of dollars doesn't mean that Billions of Chinese citizens will have access to any of it. It will likely just sit, indefinitely, as reserves since governments can't really use their reserves for very much other than to nebulously back their own worthless paper.

[MediumTex]

When thinking about different U.S. economic doomsday scenarios, the questions I always try to think about are the following:

If the U.S. is losing, who is winning?

If people are selling treasuries, what are they buying?

If people are getting out of dollars, what currency are they getting into?

We have a treasured practice in the U.S. of bemoaning the imminent decline of something about our way of life that we really like.  It surprises me that so many people can get sucked into such gloomy thinking, however, since we live in what is one of the most prosperous societies in the history of the world.

Some dude in Africa who has never known anything but hunger, illness and the danger of being killed by his own government (or the "rebels" who are endlessly fighting the government) would probably be baffled to hear all of the complaining in the U.S. about meaningless abstractions like interest rate projections, inflation trends, budget deficits, etc.  Since no one knows what will happen, why worry about it?  Why waste any mental energy on it at all once you have protected yourself against the full range of possible future scenarios?

What would happen to the PP if the U.S. defaulted on its debt or the dollar lost reserve currency status?  I don't know, but there are so many other risks in my life that are far more likely to occur that I try not to get too tangled up in such low-probability questions.  To me, pondering such questions is sort of like having a home ownership experience that consists solely of worrying about what would happen if your house were struck by lightning or torched by an arsonist.  I would suggest that after you have purchased insurance to cover each scenario that worries you (which we do with the PP in the form of gold), the best bet is to just relax and enjoy your life as much as you can and don't let your investments distract or trouble you in any way.  This is a point that Harry Browne touched on often, and I think that it is sage advice.

[Kshartle]

We have a treasured practice in the U.S. of bemoaning the imminent decline of something about our way of life that we really like.  It surprises me that so many people can get sucked into such gloomy thinking, however, since we live in what is one of the most prosperous societies in the history of the world.

MT do you think it's more likely that people have irrational fears about the future economic situation here and they search for data to confirm these fears; or is it more likely that people don't want to believe the data because they want to ignore the possibility or likelihood of major problems.

See I think the second one is much much more likely. I don't think humans or Americans are overly pessamistic about the future and make irrational cases for why things will get worse, I think they prefer to avoid what is uncomfortable for them to think about so they dismiss arguments by saying the other person is just a doomsayer. It's comforting for them to label someone and dismiss there arguments that way rather than actually examine them.

Saying things like...."If the US is losing then who is winning?", this to me sounds like an argument from effects or from adverse affects.

A won't happen because that means B would have to happen.

The US won't have a major economic catastrophe because then some other country would have to be doing better by comparison and that seems unlikely.

The two are not intertwined as far as I can tell.

Do you think the Central bank can keep printing the same amount and the economy will recover?
Can they keep increasing the amount forever without destroying the currency?
If they ever stop will this not cause rates to spike?
If rates spike, what will happen to the housing market and the rest of the economy?
If rates spike, how will the government afford the interest on the now 17 trillion and rapidly growing debt.

Dismissing these very legitimate questions as irrational musings of a doomsayer and ascribing it to an American penchant for looking for problems where they don't exist.....to me that's a missjudgement.