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Agreed. As long as the US Dollar is the global currency the Govt can simply print more money to cover that debt. Other countries cant do this however.
by tharmas 3y ago
Agreed. As long as the US Dollar is the global currency the Govt can simply print more money to cover that debt. Other countries cant do this however.
- FredPret 3y agoThey can and they do. The Yen is nowhere near the Dollar for global power, and yet they have much more debt than the USA. The mechanism that gives the US government the power to print more money is the capacity of the US economy to churn out ever more goods and services while absorbing regular price increases.
- tharmas 3y agoSure, but isn't the value of the Yen adversely affected. Most of the Japanese debt I believe is domestic. It used to be anyway. That might have changed recently.
- Quarrel 3y agoNo. As long as you can issue debt in your own currency, then your Govt can simply print more money to cover that debt. This is true for lots of developed nations, not just the USA.
- tharmas 3y agoYes, but doesn't that currency then get devalued? My point was that the US is probably the only country that can print money without it adversely affecting the value of the US dollar. Isn't the value of the US currency partly based on the sum total of all the goods and services of the USA?
- don_neufeld 3y agoI don’t think that’s the essence of it at all. Is it helpful to be the reserve currency? Hugely yes, it gives the society a buffer it otherwise wouldn’t have. And that buffer is very, very valuable. But having a buffer misses the mechanics. It all comes down to one thing: Are the investments we are making returning at a competitive rate? Any country where that answer is NO for a long enough time is going to have a reckoning.