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What do you think happens to those folks in the long term???
What do you think happens to those folks in the long term???
The idea that it is foreign inflows associated with the reserve status of the dollar that "allow" the US to run such large fiscal deficits makes especially little sense in the context of foreign countries. Japan and China, for example, have run up far greater fiscal...
The idea that it is foreign inflows associated with the reserve status of the dollar that "allow" the US to run such large fiscal deficits makes especially little sense in the context of foreign countries. Japan and China, for example, have run up far greater fiscal...
While this is widely believed, it isn't true. Foreign capital inflows don't fund fiscal deficits. They fund current account deficits, and they must be matched domestically either by higher US investment, higher US unemployment, or higher US household and fiscal debt.
While this is widely believed, it isn't true. Foreign capital inflows don't fund fiscal deficits. They fund current account deficits, and they must be matched domestically either by higher US investment, higher US unemployment, or higher US household and fiscal debt.
Simply assuming foreign inflows finance the fiscal deficit is a mistake that comes from thinking incrementally about the economy rather than systemically, or in terms of balance sheets. It implicitly assumes that domestic debt is independent of the external account.
Simply assuming foreign inflows finance the fiscal deficit is a mistake that comes from thinking incrementally about the economy rather than systemically, or in terms of balance sheets. It implicitly assumes that domestic debt is independent of the external account.