National Entropic Spirals

If I said that increasing the deficit and inflation were the way to solve the budget problem, who'd believe me?

A US-led trade deal is currently being negotiated that could increase the price of prescription drugs, weaken financial regulations and even allow partner countries to challenge American laws. But few know its substance.

What I'm referring to begins at 22:00

"...if we wan't to see growth in the economy today, the government is going to have to run larger deficits."

at 22:50 he elaborates that with a lower valued dollar, we will be able to sell more trade goods.

Now, I'm not some talking head with a lot of paper on my wall... but wouldn't devaluing the dollar make it take much longer to pay off loans? Why wouldn't this lead to a national "entropy spiral" as special interests consolidate power?

Yves Smith and Dean Baker on Secrets in Trade




Free economics lesson anyone?

teachtaire
Now, I'm not some talking head with a lot of paper on my wall... but wouldn't devaluing the dollar make it take much longer to pay off loans? Why wouldn't this lead to a national "entropy spiral" as special interests consolidate power?

Imagine if the US ordered the federal reserve to print off $100 trillion worth of US dollars and pay off all the debt it owes using that money. Sure the value of the dollar would decrease tremendously in value, but the debt is probably in US dollars anyways. The only people who would be worse off would be the American people because their currency is worthless, and the people who had their money given back to them and paid off in full in worthless american dollars.

reply to post by teachtaire


Sorry, not a economics nerd but a few points anyway.

I have never understood the 'deficits are good' crowd. It makes no sense to me. Sure, as with everything, there may be some positive spin on it. These guys are embracing that minimal silver lining and proclaiming it as a fundamental strength we need to race after.

How much longer can we assume our debt will be purchased? At some point, the party guests will have had enough and make their way to the door.

A dollar with even less value will not necessarily bring jobs racing back to the US. There is always someplace else with a more pathetic cost of living.