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Your analogs are poor fits: The solar system is an extremely stable system, while our economic system is not at all stable. Your proposed money cycle is based
by Apes 7y ago
Your analogs are poor fits:
The solar system is an extremely stable system, while our economic system is not at all stable.
Your proposed money cycle is based on the concept of a closed system, which the US economy is definitely not.
If the US government starts having to pay an unbearable amount of debt, money is going to outflow to other countries and make it harder for the US to issue new debt.
If the US just issues enough money to pay the debt off, then interest rates are going to go through the roof and overcompensate for what just happened, making the situation even worse. The US economy would probably collapse.
- neilwilson 7y agoThe dollar economy is a closed system. Dollars cannot be converted. They are always exchanged. So where do they go and what do people do with them? A paper dollar is just a receipt for a liability entry in the US treasury - wherever you are in the world. For interest rates to go up, bond prices have to go down. If the Fed just buys up bonds that drop below par with new dollars, how can interest rates go up?