Delphi: Nothing in Excess

The giant of Indonesian literature is gone today. The one that translated the Indonesia history into some excellent novels: Tetralogy and Arus Balik.

This story is written on 03.38 a.m at the office (LPEM FEUI), when the RICA’s troops in their dreams at the second floor of our office: Herman, Usman, Oki, and Patrisia (Mas Josi and Febrio also had the same experience the week before). Probably this is the first time in the LPEM project’s history where the project team spending most of their time in their office, especially in the night for more than a month.     

I saw Depok for the first time in the 1991, the time I became  a new student in University of Indonesia. It was a small town that was surrounded by trees and universities (University of Indonesia, Pancasila University, and Gunadarma University). Today Depok is not just surrounded by trees and universities but also some real eastates and malls.

From the time perspectives, Depok is a young city, but from the density of the malls, Depok is the most striking one in the world. Compared with Washington D.C or The Hague that was build hundreds years ago, the density of malls in Depok is the highest. This phenomenon could be recorded in the world history.

I was sent an e-mail—I consider as a rumor, that China will flood the world with its dollar’s supply and the dollar will downfall like rupiah in 1998. And the US economy will suffer from this action, like Indonesia in 1998.

My first reaction was that I assumed it was just a rumor that far from reality. However, my philosophy reminded me that there is no impossibility in this world and the certainty is the uncertainty itself. I tried to search the expalantions how vurnerables of the US economy.

First.During the last two decades, US defisit was financed by foreigners and that condition is almost matched the Indonesian condition during the early 90’s, known as the golden years of growth.

Second, the successor of Greenspan is still trying tune in his new position and probably under the shadow of Greenspan. I mean, his capabilities doing his jobs is being waiting by the world. His first policy was rising interest rate like what Greespan did many times. This policy has no breaktrhrough to help US economy, but only the way in financing the defifit in the short run. That kind of policy will not last.

Eventhough those condition exist in the present situation in US economy, the fundamental economy is still strong. Then the rumor that flooding supply of dollar will hurt US economy like Indonesia has a small possibility. In addition, the worsen condition of US economy will also affect the whole world, because 25% of world production and consumption are in the US, the biggest economy in our lifetime.