But notice that in the Russian case their reserves were demanded to be paid in other currencies that weren't their own. When a country does that it puts them at a default risk. A monetarily sovereign country never has that risk.
I have never advocated any such thing.
Russia was monetarily sovereign. US is "monetarily" sovereign as well. If it can happen in Russia it can happen to the US. We have the Chinese trillion dollar situation hanging over the US's head. So it really could happen here.
You are here to push heterodox economic agenda. MMT has some interesting point of views, but you are to MMT what Phattonez is to Austrian Economics.
I don't have an agenda, I've been an Austrian a Keynesian and now an MMT'er. I changed my stances based on which schools have evidence to back up their claims.
You only post links to MMT blogs and websites. When was the last time a thread you created didn't have a billyblog or Mosler website link in the OP?
I've posted numerous other sources like Forbes, Mises, the federal reserve, etc....
Economics, contrary to what many would like us to believe, is not a dark science. One does not need to obtain a PhD to understand the underlying mechanics of the economy.
They weren't monetarily sovereign, they relied on borrowing from other countries to spend.
And the US doesn't?? Guess you missed the Chinese hint I gave you. Guess who is the second largest US debt holder. It's not Americans but foreigners. :lol:
No, the US doesn't borrow in anyone elses currency.
I thought it created it out of thin air.
you can create out of thin air but you have to hold foreign currency to give it value or your currency value will drop by % you create.
The only reason we hold currency is for trade imbalances, not for currency valuation.You don't have to borrow anyone else's currency. Russia didn't borrow dollars as you don't pay government workers with dollars but rubles, thus they exchanged Dollar for Ruble. US has 43,493 million in currency other then the dollar. That's 1/3rd of the currency reserve the US holds. This holding is to provide a stable fixed rate. If the Chinese dump any of the 3 trillion dollar position they have the US would have to devalue or buy up foreign currencies to narrow the spread.
All you have to do is look at the currency swap the Fed and the ECB did to see this. The Euro was crashing and the Fed said we'll take Euros and give you dollars to stabilize the currency. US monetary policy is no different.
JP Hochbaum said:So you have nothing to add except calling me an elitist?
So the effect of deficit spending is a reduction in wealth for taxpayers on the one hand and a decrease in monetary value on the other.
What???
Explain your position in greater detail.
The only reason we hold currency is for trade imbalances, not for currency valuation.
Basically if you create X amount, you need to create Y amount in value (product) or hold Z amount of currency. If you don't you have higher inflation affecting your currency.
Your position cannot be supported empirically. M2 money stock has increased by 44% since December 2007, while production (output) has grown by only 12.9% in the same period. Where is the inflation?
It should say defacto end user producer as you can't find a US "made" product that isn't manufactured overseas, shipped to the US, put together then sold (i.e. Apple, Autos, and so on).Another bogus claim! The U.S. is the defacto top producer of goods and services in the world. When was the last time the Fed intervened in the forex market?
a trade imbalance occurs when there is a country who produces a lot and a country who wants what they produce. Has nothing to do with currency.Trade imbalance is a currency imbalance. Too few of one currency too much of another (dollar). It's why the US dollar has fallen against the Euro, Aussie dollar and Canadian dollar over the last few years. Why we bitch about the Chinese Yuan. Its why the Japanese are trying to print their way out because there is not enough yen in the foreign markets to increase outside demand for Japanese products.
a trade imbalance occurs when there is a country who produces a lot and a country who wants what they produce. Has nothing to do with currency.
It has zilch to do with money and everything to do with cost of goods sold. We trade with other countries when they could do things cheaper than we can, or when we need/want something they have.It has EVERYTHING to do with currency. Trade Imbalance is and will always be the difference between monetary value of exports and imports of output in an economy.
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