[quote=Rich Toscano]
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]
Because US is the only country with debt denominated in its own currency. All other countries have their external debt denominated in some other currency. This big difference is being overlooked. If Australia print excessively, then at some point their trade partners will demand payments in USD and not in Australian currency. Not a lot of people hold their currency as reserves like they do for USD, so if Aus do print excessively, there will be more incentive for external entities to dump and make a run on their currency starting a downward spiral.
Question is does/if/when the same even applies to USD?
[quote=Rich Toscano]
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]
Understood, but at least it will not be a debt crisis!
[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]
[quote=Rich Toscano]
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.
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.[/quote]
Here is where I can flip your argument against your position. The last time we devalued, nothing earth shattering happened; yes there was some short term pain, but we made through it. So why does “this time it is different” apply now and not in ’74?
I do agree that those investors/speculators who get the timing of this asset markdown right will see returns that are “quite satisfactory”.
