From: Brian Atkins (brian@posthuman.com)
Date: Sun Mar 09 2003 - 17:59:00 MST
Reason wrote:
>
> The bottom line is that the US supplies dollars to the world. Dollars are
> just another commodity. Since dollars are not backed by any other commodity
> (gold, say), and cost far less to produce than they retail for, the US can
> create the means to pay for resources out of thin air. (So can any other
> Western nation, but the US is in the position of being able to distribute
> the devaluation of the commodity to other dollarized markets in the world --
> any other Western country that did what the US has been doing over the past
> 20 years would be in the midst of hyperinflation and economic collapse). The
> US is aggressively devaluing the dollar by issuing more to pay for trade and
> other deficits. This affects the world economy.
>
This is incorrect... not even countries in very bad trouble like Japan
have yet resorted to using freshly created currency to pay debts. Right
now, they (and the USA) still pay their bills using the traditional
method of issuing bonds that they eventually pay back (theoretically).
There actually is an argument currently that Japan has so much debt, and
also such a problem with price deflation in its economy that it would
actually help it to do what you describe above.
-- Brian Atkins Singularity Institute for Artificial Intelligence http://www.singinst.org/
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