7 ms·

Absolutely terrible comparison. The Zimbabwean dollar is not the world's reserve currency. Zimbabwe cannot park a naval fleet off the coast of any country that

Absolutely terrible comparison. The Zimbabwean dollar is not the world's reserve currency. Zimbabwe cannot park a naval fleet off the coast of any country that tries to move away from the Zimbabwean dollar, or direct the worlds largest banks to freeze assets, or apply crushing economic sanctions. The US is probably the only country in the world that can print money without runaway inflation, and I don't doubt that we will maintain dollar hegemony with force if needed.

whatshisface 7y ago
Yeah, the US is the only country in the world whose debt is dominated in its own currency. Want to sell me some goods and services in exchange for an IOU of one whathisface buck? Countries around the world have been answering "yes" for a century and now the inflation tax will be levied against everybody, not just Americans.
- stephen_g 7y ago
  No it’s not... All Government bonds in my country are denominated in $AUD (by AOFM policy). Japan’s are in Yen. The UK’s is in pounds, etc.
stephen_g 7y ago
The US is absolutely not not the only country that can use monetary expansion without causing excess inflation. Basically any country with its own central bank, fully flexible exchange rates, with all Government bonds denominated in its own currency, with a decently large and productive economy, and federal taxing and spending can do it. There are at least several who meet that criteria (even New Zealand, for example). Once you satisfy all that, high inflation just means you’re either spending too much, or not taxing enough. A big part of what happened in Zimbabwe, by the way, was that land reforms caused a massive collapse in food production (a major part of their economy) and unemployment skyrocketed. They spent a lot in response (also having foreign denominated debt I believe), but mostly not focused on policy that would increase capacity. At the same time, they were having to spend much of their foreign reserves on food because of the supply collapse. So the spending and hyperinflation were inevitably consequences of previous mismanagement.
- daxorid 7y ago
  > A big part of what happened in Zimbabwe, by the way, was that land reforms caused a massive collapse in food production (a major part of their economy) and unemployment skyrocketed. They spent a lot in response Okay. Fed officials are predicting 30% unemployment, and we're seeing a massive collapse in goods and services production (not food, but it may as well be in a 70% services based economy) as cities go into lockdown. To respond to this, we intend to spend a lot. I'm a bit confused as to how the current situation doesn't mirror, nearly perfectly, the Zimbabwe example. We are literally printing and spending into a severe supply (yes, services follow supply curves just as much as goods do) and unemployment shock.
  - sykick 7y ago
    Here is why the situation in the U.S. does not nearly perfectly mirror Zimbabwe. One word: confidence. People have far more confidence in the dollar than they do Zimbabwe's currency. As the global financial system is currently setup losing confidence in the dollar is highly unlikely. You might lose confidence in the dollar and buy gold and I might do the same but we aren't the people whose confidence the dollar's value relies upon. I'm not an economist but as far as I understand these things we won't get hyperinflation as long as there is confidence in the dollar as a currency.
  - vonmoltke 7y ago
    > Fed officials are predicting 30% unemployment One official said it may happen: https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bul...

whatshisface 7y ago

Yeah, the US is the only country in the world whose debt is dominated in its own currency. Want to sell me some goods and services in exchange for an IOU of one whathisface buck? Countries around the world have been answering "yes" for a century and now the inflation tax will be levied against everybody, not just Americans.

stephen_g 7y ago
No it’s not... All Government bonds in my country are denominated in $AUD (by AOFM policy). Japan’s are in Yen. The UK’s is in pounds, etc.

stephen_g 7y ago

The US is absolutely not not the only country that can use monetary expansion without causing excess inflation. Basically any country with its own central bank, fully flexible exchange rates, with all Government bonds denominated in its own currency, with a decently large and productive economy, and federal taxing and spending can do it. There are at least several who meet that criteria (even New Zealand, for example). Once you satisfy all that, high inflation just means you’re either spending too much, or not taxing enough. A big part of what happened in Zimbabwe, by the way, was that land reforms caused a massive collapse in food production (a major part of their economy) and unemployment skyrocketed. They spent a lot in response (also having foreign denominated debt I believe), but mostly not focused on policy that would increase capacity. At the same time, they were having to spend much of their foreign reserves on food because of the supply collapse. So the spending and hyperinflation were inevitably consequences of previous mismanagement.

daxorid 7y ago
> A big part of what happened in Zimbabwe, by the way, was that land reforms caused a massive collapse in food production (a major part of their economy) and unemployment skyrocketed. They spent a lot in response Okay. Fed officials are predicting 30% unemployment, and we're seeing a massive collapse in goods and services production (not food, but it may as well be in a 70% services based economy) as cities go into lockdown. To respond to this, we intend to spend a lot. I'm a bit confused as to how the current situation doesn't mirror, nearly perfectly, the Zimbabwe example. We are literally printing and spending into a severe supply (yes, services follow supply curves just as much as goods do) and unemployment shock.
- sykick 7y ago
  Here is why the situation in the U.S. does not nearly perfectly mirror Zimbabwe. One word: confidence. People have far more confidence in the dollar than they do Zimbabwe's currency. As the global financial system is currently setup losing confidence in the dollar is highly unlikely. You might lose confidence in the dollar and buy gold and I might do the same but we aren't the people whose confidence the dollar's value relies upon. I'm not an economist but as far as I understand these things we won't get hyperinflation as long as there is confidence in the dollar as a currency.
- vonmoltke 7y ago
  > Fed officials are predicting 30% unemployment One official said it may happen: https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bul...