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Well, what's China going to do as we print our way out of our debt to them? If they get bellicose, then our nukes will come in handy. If they sit there and ta

by JeffL 15y ago

Well, what's China going to do as we print our way out of our debt to them? If they get bellicose, then our nukes will come in handy. If they sit there and take what will essentially be a default on our debt via printing, then will be be conquered by them economically?

sliverstorm 15y ago
What will happen is no other country will invest in us again, and considering our addiction to debt, we will run into some... problems. Heck, if we inflate our currency aggressively enough, other countries could wind up simply not accepting our money. It's hard to imagine today, but it's a real possibility- the value and purchasing power of your money is entirely rooted in everyone else's confidence in it's stability.
- nhaehnle 15y ago
  There is no way other countries would stop accepting the US$, as long as the US has things that those other countries want to buy. The US has a lot of those things ranging from food to high-tech, so there's absolutely no risk that other countries would totally reject the US currency. Yes, the exchange rates may well decline further, and this will force you to reduce your net imports - but that's only fair. You can only profit from other countries' work for so long without sending something tangible in return. And as far as the "addiction to debt" is concerned, it gets a bit old to repeat the same things over and over again, but have you heard of the sectoral balances? Analyze the flows of money between the three macroeconomic sectors (the federal government, the domestic private sector, and the foreign sector), and it should become clear to you that the massive increase in debt over the last two years is simply a reflection of the fact that the US private sector has managed to amass insane amounts of wealth. [1] The distribution of that wealth may be very lopsided, but then it's the distribution of that wealth that needs to be challenged, not the buildup of debt. [1] Part of the debt build-up obviously also reflects foreign holdings, but the one thing that really stands out in the last few years in the US is how the private sector has gone from a deficit to a surplus as people attempt to fix their balance sheets.
- true_religion 15y ago
  > What will happen is no other country will invest in us again Again? Over what time period? I think an investment ban, even one widely hailed as a good thing would fall apart within 30 years of its inception. Governments change, companies rise and fall, and people die. After a while, others would be looking at America and asking "hmmm why don't we invest in those guys, they're a whole different generation different from their parents".

by JeffL 15y ago

sliverstorm 15y ago

What will happen is no other country will invest in us again, and considering our addiction to debt, we will run into some... problems. Heck, if we inflate our currency aggressively enough, other countries could wind up simply not accepting our money. It's hard to imagine today, but it's a real possibility- the value and purchasing power of your money is entirely rooted in everyone else's confidence in it's stability.

nhaehnle 15y ago
There is no way other countries would stop accepting the US$, as long as the US has things that those other countries want to buy. The US has a lot of those things ranging from food to high-tech, so there's absolutely no risk that other countries would totally reject the US currency. Yes, the exchange rates may well decline further, and this will force you to reduce your net imports - but that's only fair. You can only profit from other countries' work for so long without sending something tangible in return. And as far as the "addiction to debt" is concerned, it gets a bit old to repeat the same things over and over again, but have you heard of the sectoral balances? Analyze the flows of money between the three macroeconomic sectors (the federal government, the domestic private sector, and the foreign sector), and it should become clear to you that the massive increase in debt over the last two years is simply a reflection of the fact that the US private sector has managed to amass insane amounts of wealth. [1] The distribution of that wealth may be very lopsided, but then it's the distribution of that wealth that needs to be challenged, not the buildup of debt. [1] Part of the debt build-up obviously also reflects foreign holdings, but the one thing that really stands out in the last few years in the US is how the private sector has gone from a deficit to a surplus as people attempt to fix their balance sheets.
true_religion 15y ago
> What will happen is no other country will invest in us again Again? Over what time period? I think an investment ban, even one widely hailed as a good thing would fall apart within 30 years of its inception. Governments change, companies rise and fall, and people die. After a while, others would be looking at America and asking "hmmm why don't we invest in those guys, they're a whole different generation different from their parents".