The debt doesn't matter.
What matters is being the world's reserve currency. I don't know a metric for that. Loose it and then debt matters a lot.
What matters is being the world's reserve currency. I don't know a metric for that. Loose it and then debt matters a lot.
Reserve currency status helps US financial sector but it also hurts US competitiveness and exports. The net benefit is estimated to be between 0.3 to 0.5 percent of US GDP [1].
1. An exorbitant privilege? Implications of reserve currencies for competitiveness https://www.mckinsey.com/featured-insights/employment-and-gr...
2. Questioning the U.S. Dollar’s Status as a Reserve Currency https://www.jpmorgan.com/jpmpdf/1158630192140.pdf
Just because there are some downsides, doesn't mean all the upsides go away.
I don't know if holding up Japan's situation as a beacon of light is particularly enticing here.
So in that specific situation it was entirely possible for a gov to intervene without resorting to buying foreign currency. In my country they still didn't, in Hungary they did.
I'd like to increase the volume of my balloon as much as possible. I blow it up a little bit. It increases a little bit. I blow into it hard. It substantially increases. I keep blowing and it invariably keeps getting larger and larger. There is an absolutely perfect and undeniable correlation between how much I blow into that balloon and the measured volume. In fact it's not even a correlation, it is a clear causal relationship. This leads to an empirical conclusion that is completely wrong.
In our society those that say to keep blowing are going to end up succeeding. Not only do their predictions work out, and quite profitably so, but they're also optimistic and promise untold volumes to come. The understanding would be to consider that in fields where meaningful tests cannot be readily performed, empiricism should never replace logic. And illogical but empirically supported concepts should be treated with extreme skepticism. Logic can be flawed and proven to be wrong. Empiricism can be equally flawed, yet the danger is that it can also be impossible to prove wrong until you're left picking up pieces of rubber.
With regard to economics, deflation seems bad. Really bad. I (think) I get your point. I think you’re expecting physics results from economics. Econ usually says weak things in a limited context, like weather.
Yes. Debt matters. I would be happier with less of it. But in our current context, for a little while, it’s not that important. It’s a fire 300 miles away. The fire could be a really big personal problem surprisingly quickly, but today the biggest worry is housing and feeding the refugees. It’s a strained analogy. Hopefully it gets the point across.
Does debt not matter because we have experienced relative stability and growth for 70 years? If we had another depression (not the hyped great recession but true depression) or world war, would we be better off with less debt or does it truly not matter?