“In fact, during periods of uncertainty, the US Dollars becomes the safe haven for investors.”
And what happens when that ceases to be the case, and creditors price in the very low chance that we will pay our debt back in real terms? That’s when you will really see the “collapse” everyone keeps talking about.
That’s my issue with Krugman et al’s framework… the unquestioned assumption that the world will forever keep buying all the super-low rate debt we cram down their collective throat without ever, at any point, stopping to question how we will pay it all back.
