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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Mike M2 who wrote (47360)12/13/2000 11:21:27 PM
From: eddieww  Read Replies (2) of 436258
 
Thanks for the link, william, interesting article.

When I floated the notion of inflating away our foreign debt, which apparently is more than 1/4 of all USD denominated debt owed by americans, I assumed that it was the least likely course since I hadn't heard of even a suggestion of it. It occurred to me in a half-dream state while I was falling asleep, and I wrote it down. During the weekend, my limited knowledge of monetary policy and finance didn't come up with a good reason why it would be worse than a several year long recession I think we're headed for, so I posted it to find out if it would never happen because the powers-that-be were too stupid or too smart to institute it.

The hyperinflation remedy is dismissed in this article and by a few on this thread by claiming that foreigners would immediately sell their dollars. My question was, to whom? they must either find a willing buyer or wait until the debt instrument matures. Unlike other nations, our currency is the world's reserve currency and they would therefor have no way to convert it to another, would they? Every debt instrument they did manage to sell would further debase the dollar and reduce the work needed by us to debase it, wouldn't it? The other plausible objection was that it would collapse the worldwide fiat monetary system. Maybe so, so what? What would be the impact of that on the average US citizen? I don't know. I do know the impact of protracted severe recession though, and it's a bitch.

There has to be a better objection to a 30-50% devaluation than I've heard so far. Otherwise, I believe I would have seen discussion of it rather than a dearth of mention in articles where the notion is invariably dismissed out-of-hand.
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