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Another misconception that has to die is that governments can get away with printing money indefinitely. The concept itself is not new: Roman Empire also did th

by mamon 6y ago

Another misconception that has to die is that governments can get away with printing money indefinitely. The concept itself is not new: Roman Empire also did the same, shortly before its fall. Soviet block countries did that before 1989. Venezuela and Zimbabwe also did it. See the common theme here?

netsharc 6y ago
The difference between the smaller countries and the USA is, the dollar is basically the world's currency now. The world can afford to let Venezuela fail, but if the USA fails, the whole world goes down with it, so IMO they'll happily "lend" the USA more money. With the Roman Empire, I'm guessing other problems caused it to fall; it didn't fall because of money printing, but it was printing money because it was falling.
- AnimalMuppet 6y ago
  But printing dollars like they're toilet paper might lead to the US no longer being the reserve currency. That isn't a divine right. It isn't a once-and-forever thing. We can lose it.
  - runawaybottle 6y ago
    There would have to a perfect storm of events that stains the US as unstable. A Pandemic or mortgage crisis is not enough. We’d need devastated cities, war on our soil, or a string of insane natural disasters (Yellowstone erupting). The only other realistic event? China brings a billion people into mostly lower middle class, and dwarfs the notion of American consumerism through sheer scale.
    - mikem170 6y ago
      The U.S. share of world GDP has already shrunk from over 40% after WWII to under 25% today. This was the reason Nixon had to take the dollar off the gold standard and make deals with Saudia Arabia and OPEC to ensure oil was priced in dollars, otherwise many countries would have used other currencies for their trade. Since then we have been importing consumer goods, first from Japan and more recently China, to the detriment of American workers. The rest of the worlds growing share of GDP needs more and more dollars, and we can't satisfy that demand without continuing to debase our currency and causing problems at home. More and more countries are making deals outside the dollar system, countries that are too big for us to blow up easily. This is what ended the British pound as the worlds reserve currency, and the Dutch gilder before that. Their share of world GDP shrunk rendering their position untenable. I can't do this topic justice, but I thought this was a really good write-up, https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/
- grecy 6y ago
  > The world can afford to let Venezuela fail, but if the USA fails, the whole world goes down with it Hypothetically if the riots at the Capitol had gotten really bad and America fell even close to Civil War a couple of weeks ago, I'm quite certain the rest of the Developed World would have quickly switched to using the Euro or the Yen or the Yuan or some combination of those and more. I seriously doubt it would take more than a few days before the rest of the world moved on without the US.
  - disgruntledphd2 6y ago
    There's no real Euro safe asset equivalent to Treasuries. Until that changes, the dollar is here to stay.
  - netsharc 6y ago
    I'm not an expert in this area, but I doubt the world changing their debt to a different currency is that simplistic... and I doubt you're an expert either. For one thing everyone wanting to get rid of their USD and buying EUR would cause the USD to crash and EUR to spike, so, well, there's their economic crisis (because suddenly your 10000 USD debt would turn from a ca. 8200 EUR debt to something like a 20000 EUR one).

by mamon 6y ago

netsharc 6y ago

The difference between the smaller countries and the USA is, the dollar is basically the world's currency now. The world can afford to let Venezuela fail, but if the USA fails, the whole world goes down with it, so IMO they'll happily "lend" the USA more money. With the Roman Empire, I'm guessing other problems caused it to fall; it didn't fall because of money printing, but it was printing money because it was falling.

AnimalMuppet 6y ago
But printing dollars like they're toilet paper might lead to the US no longer being the reserve currency. That isn't a divine right. It isn't a once-and-forever thing. We can lose it.
- runawaybottle 6y ago
  There would have to a perfect storm of events that stains the US as unstable. A Pandemic or mortgage crisis is not enough. We’d need devastated cities, war on our soil, or a string of insane natural disasters (Yellowstone erupting). The only other realistic event? China brings a billion people into mostly lower middle class, and dwarfs the notion of American consumerism through sheer scale.
  - mikem170 6y ago
    The U.S. share of world GDP has already shrunk from over 40% after WWII to under 25% today. This was the reason Nixon had to take the dollar off the gold standard and make deals with Saudia Arabia and OPEC to ensure oil was priced in dollars, otherwise many countries would have used other currencies for their trade. Since then we have been importing consumer goods, first from Japan and more recently China, to the detriment of American workers. The rest of the worlds growing share of GDP needs more and more dollars, and we can't satisfy that demand without continuing to debase our currency and causing problems at home. More and more countries are making deals outside the dollar system, countries that are too big for us to blow up easily. This is what ended the British pound as the worlds reserve currency, and the Dutch gilder before that. Their share of world GDP shrunk rendering their position untenable. I can't do this topic justice, but I thought this was a really good write-up, https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/
grecy 6y ago
> The world can afford to let Venezuela fail, but if the USA fails, the whole world goes down with it Hypothetically if the riots at the Capitol had gotten really bad and America fell even close to Civil War a couple of weeks ago, I'm quite certain the rest of the Developed World would have quickly switched to using the Euro or the Yen or the Yuan or some combination of those and more. I seriously doubt it would take more than a few days before the rest of the world moved on without the US.
- disgruntledphd2 6y ago
  There's no real Euro safe asset equivalent to Treasuries. Until that changes, the dollar is here to stay.
- netsharc 6y ago
  I'm not an expert in this area, but I doubt the world changing their debt to a different currency is that simplistic... and I doubt you're an expert either. For one thing everyone wanting to get rid of their USD and buying EUR would cause the USD to crash and EUR to spike, so, well, there's their economic crisis (because suddenly your 10000 USD debt would turn from a ca. 8200 EUR debt to something like a 20000 EUR one).