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> People know about inflation, and are free to adjust their behavior accordingly. People are not free to adjust their behavior accordingly. The average person
by Canada 13y ago
> People know about inflation, and are free to adjust their behavior accordingly.
People are not free to adjust their behavior accordingly. The average person is forced to transact in the official currency. Any alternative that threatens to become liquid enough for the average person to use will be shut down. (Thus the interest in this Bitcoin backers meet government regulators article)
Sovereign countries with key energy resources must sell them for US dollars exclusively and they must recycle excess dollars into US government bonds, or receive freedom and democracy. This is the Petrodollar system, and it is the reason why the Feds can run endless deficits, and the Fed can put trillions of dollars of unmarketable assets onto its balance sheet without creating Weimar-style problems.
- nhaehnle 13y agoThe Fed does not run endless deficits, in fact, it makes a profit. And any central bank can do crazy amounts of QE without inflation once the economy hits the Zero Lower Bound. The ECB did something rather similar. All of this has nothing to do with my central point, which was about real rates of interest.
- Canada 13y agoPlease notes the use of Feds and Fed. The Feds run the endless deficit, not the Fed. And in my humble opinion, the Petrodollar system has a great deal to do with real rates of interest.