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Too bad Japan decided to save the banks in the 90s crash, and drain their citizen's cash savings by keeping interest rate at 0%. Fast forward to present day wh

Too bad Japan decided to save the banks in the 90s crash, and drain their citizen's cash savings by keeping interest rate at 0%. Fast forward to present day where the savings rate is close to 0%, and they have 200% GDP public debt. US is trying to do the same thing, but alas, it won't have the same effect as Americans have a negative savings rate, and dollar will suffer massive inflation in the process, dooming 60% of the population that live on less than 40k a year.

fonosip 16y ago
that sounds bad. but the US is nowhere near 200% GDP public debt. and has the world's reserve currency which is a key thing Japan did not have.
- SkyMarshal 16y ago
  As soon as you start counting on things like having the world's reserve currency, or house prices never declining, etc. etc., you lose it. Economic history is replete with that theme. Will we ever learn?
  - OmniBus 16y ago
    One well-known fact is that nearly every petroleum producer trades petroleum in US dollar. Rumour has it that if some major producers attempt to switch to another currency, she hurts US economy and will be retaliated by US. Printing more money does not benefit Americans in general. Much of money is taken by US financial firms to overseas for speculation instead of going to manufacturing sector when the devaluation of US dollar is foreseeable. Sudden flux of speculation hurts the economy of other nations.
    - SkyMarshal 16y ago
      I know how it works, but the trend to replace the US dollar as the world reserve currency is already happening, being driven primarily by China and Russia. Be it a currency basket, IMF SDRs, 'petro', or something else, they're working on alternatives. It won't happen overnight, and the effort may ultimately fail, but it would foolish and complacent of the US to count on having the world reserve currency forever. A multi-polar world eventually won't accept it, both b/c of the Triffin dilemna and balance of power games.

fonosip 16y ago

that sounds bad. but the US is nowhere near 200% GDP public debt. and has the world's reserve currency which is a key thing Japan did not have.

SkyMarshal 16y ago
As soon as you start counting on things like having the world's reserve currency, or house prices never declining, etc. etc., you lose it. Economic history is replete with that theme. Will we ever learn?
- OmniBus 16y ago
  One well-known fact is that nearly every petroleum producer trades petroleum in US dollar. Rumour has it that if some major producers attempt to switch to another currency, she hurts US economy and will be retaliated by US. Printing more money does not benefit Americans in general. Much of money is taken by US financial firms to overseas for speculation instead of going to manufacturing sector when the devaluation of US dollar is foreseeable. Sudden flux of speculation hurts the economy of other nations.
  - SkyMarshal 16y ago
    I know how it works, but the trend to replace the US dollar as the world reserve currency is already happening, being driven primarily by China and Russia. Be it a currency basket, IMF SDRs, 'petro', or something else, they're working on alternatives. It won't happen overnight, and the effort may ultimately fail, but it would foolish and complacent of the US to count on having the world reserve currency forever. A multi-polar world eventually won't accept it, both b/c of the Triffin dilemna and balance of power games.