[quote=dumbrenter]
My question was in the context of debt. WE can make the debt disappear at the stroke of a keyboard if we choose to. A luxury that makes us very unique in the world.
[/quote]
How is that at all unique? Any country in the world could do that, with the exception of the members of the Euro (and the ECB as a whole could do that; it’s just that individual Euro countries can’t do it unilaterally).
[quote=dumbrenter]
How will it be seen that we can’t print at will? This is where I get lost. And why will things get harder?
[/quote]
In my view the result will be rising interest rates and excessive price inflation, OR severely tight monetary policy to head those off… either way is equivalent to “things getting harder.”
[quote=dumbrenter]
Given that US is 25% of world economy, and given the natural resources at our disposal, the world will need us more than we need them even after we screw them over by devaluing their dollar denominated assets. This is in spite of the aging population.
[/quote]
I’m sorry, I just don’t buy the old “this time is different”/”we’re different”/”the rules don’t apply to us” trope. Yes, we have certain advantages, of course… but doesn’t justify the idea that we can infinitely print money with no negative repercussions.
[quote=dumbrenter]
To give a historical perspective, everybody else got screwed over in ’74 when Nixon took USD off gold standard. That was some big time devaluation. That did not stop anybody from trading with us.[/quote]
Right, and we endured a decade of high inflation and economic stagnation. Things got harder, to bring it full circle. (Not that I believe it was the result of Nixon’s single action you noted, but rather, that action and the stagflation were both the results of years of overly loose monetary policy).
BTW I never said anything about people not trading with us. I was rebutting your idea that because we have a printing press, there’s no problem.
