[quote=Rich Toscano][quote=dumbrenter]
To make things even interesting, the US can not only choose the interest rate, but the debt is denominated in paper that the US can print at will.
So where exactly is the problem? [/quote]
The problem is that it will eventually seen that we CAN’T print at will. Then things will get a lot harder.[/quote]
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. Of course there will be a fallout, but it will not be a debt crisis!!
How will it be seen that we can’t print at will? This is where I get lost. And why will things get harder? 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.
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.
