4 ms·
We don't tend to change that much after things like this. Economic and political forces still end up pushing the same wheels. Yes this may push some things in
by xupybd 7y ago
We don't tend to change that much after things like this.
Economic and political forces still end up pushing the same wheels.
Yes this may push some things in the direction they were already going. Like more people working from home. But this is not likely going to fundamentally change the world. Not any more so than the twin towers attack or the 2008 crash. Little changes to a massive system.
- steveeq1 7y agoWhat about hyperinflation?
- DennisP 7y agoInflation, sure, but hyperinflation mainly happens in countries that have to borrow foreign currencies. That was the case for Weimar Germany, for example. If you can sell bonds in your own currency you're much better off.
- steveeq1 7y agoI can't believe I'm the only person who sees this.
- solresol 7y agoWhat would qualify as hyperinflation? If by hyperinflation you mean "several years of 10-20% inflation" -- something unprecedented in developed economies in recent history -- then sure, that's not unimaginable. It's also not a civilisation-changing problem. Many countries have lived through that kind of experience. I supposed I could be convinced that 1970s-style stagflation could return as a result of the pandemic. If on the other hand you mean "100% per week inflation", e.g. like Zimbabwe experienced, then that one is harder to defend. You'd need to have the loss of a functioning reserve bank as a starting point (because otherwise the reserve bank would just push interest rates up to the point that inflation was reduced). Generally having a powerless reserve bank can only happen when some other country controls whatever it is that backs the currency that everyone in your country uses for trade. (e.g. being on the gold standard; being part of the Eurozone and not being trusted, large amounts of borrowing and transactions in foreign currencies; an economy based on bitcoin transactions; if any of these apply you have at least the basis for an inability to stop hyperinflation). What's the trajectory that would get the USA there though?
- gregw134 7y agoCould you explain more, or provide a link?
- DennisP 7y agoLet's say your currency is marks and you owe dollars to foreign investors. You have trouble paying so you print more marks. The marks devalue relative to your debt, making it even harder to pay off, requiring even more printing. Now say your currency is dollars and you owe debt in dollars. If you print more dollars, they devalue, but the value of your debt goes down right along with your currency. It's bad for the lenders and you might have to promise more interest to borrow more, but you don't spiral into oblivion just trying to pay off your existing debt.
- xupybd 7y agoIt's possible but I see that as a short term (< 5 years) problem not a fundamental and permanent shift to life as we know it.
- Der_Einzige 7y agoUntil foreign demand for the US dollar stops (and there's no sign of this happening) you have nothing to worry about.