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I fully agree with this thinking in general, countries don't lose because other countries are growing, quite the opposite. However, in the case of the US there
by avar 9y ago
I fully agree with this thinking in general, countries don't lose because other countries are growing, quite the opposite.
However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, and is able to strongarm other countries into accepting its domestic banking laws (through the likes of FATCA).
That situation is unlikely to persist for the next 100 years, which is going to be disproportionately bad for the US economy.
- cheriot 9y ago1. We'll get a cheaper dollar that makes US exports more competitive. 2. It will be harder for our government to do things that make the rest of the world hate us. US citizens might be better off with a less powerful government.
- nabla9 9y ago> However, in the case of the US there's the caveat that it runs the world's reserve currency, controls the petrodollar, This is something that is just said and 'known' to be true without people looking into what it means and how big the effect is. It harms US exports (USD exchange rate is artificially high) but it helps US finances. Generally it seems to have slight net positive effect. By no means is it fundamentally important for US economy. In the normal year, the reserve currency effect is estimated to be between 0.3 to 0.5 percent of US GDP. In bad year much less. http://www.mckinsey.com/global-themes/employment-and-growth/an-exorbitant-privilege http://www.mckinsey.com/global-themes/employment-and-growth/...