The debt problem is interesting. On one hand, I want to say that it's a nothingburger and we're going to get over it, but on the other, if everybody thought the way I do, it would eventually spiral into hyperinflation. So maybe the fact that people are concerned about the issue is what will cause it to be not a concern.
USD is the global reserve currency due to our internal stability as a country. There hasn't been a major war on American soil since 1865, and even that was a crushing victory for the federal government. South America has been subject to internal disputes over communism and cartels; Europe has Ukraine; China and India have had revolutionary changes in government.
Besides political stability, we have economic growth, which is the best way to fight inflation. If you print one trillion dollars, but GDP actually does increase by one trillion dollars, then there is less inflationary pressure on the currency. The fed's goal of 2% inflation per year falls in line with the target growth rate of 2% per year.
In addition to the political stability and economic growth of America, we also have a military that is willing and able to put pressure on "breakaway civilizations," like Cuba, Venezuela, Iraq, Libya, Iran, North Korea, and Russia. China is a big exception to this military pressure, but China's economy is deeply dependent on America.
Any way you cut it, via carrot or stick, it's very hard to imagine a global move away from the dollar. As long as 180 countries continue to trade in dollars, especially China, Europe, South America, and the Middle East, this has the effect of off-loading inflationary pressure onto the entire world.
If America was autarkic and didn't trade at all, then printing trillions of dollars would result in hyper-inflation. However, with the USD as the reserve currency, this inflationary pressure is distributed over a global economy. The dollar is effectively "soft pegged" to the Euro and to the majority of the world's oil trade (with the exception of Russia).
Pathetically, even the Venezuelans are forced to use dollars:
Russian GDP is 2% of global GDP. The loss of Russia isn't that significant, but even if it was, Russia's trade in Yuan can be thought of as a proxy for the USD, because it is also pegged to dollar:
1. American economic growth falls behind global growth (Japanese stagflation). This might occur if America pursues the Canadian/British immigration+regulation package. Although you could argue that California is already doing this, and it has much better GDP growth than Canada/Britain. It's possible that illegal immigration is a really good (slave) system for suppressing wages, and Canada/Britain don't allow for under-the-table cheap labor the way California does.
2. The American military stops pressuring "rogue states."
3. Global trade significantly decreases, to the point where America becomes semi-autarkic, and can no longer off-load inflationary pressure. This could occur as a result of an escalation in Taiwan, or if Trump abandons Ukraine and Germany is forced to rebuild Nordstream.
The debt problem is interesting. On one hand, I want to say that it's a nothingburger and we're going to get over it, but on the other, if everybody thought the way I do, it would eventually spiral into hyperinflation. So maybe the fact that people are concerned about the issue is what will cause it to be not a concern.
USD is the global reserve currency due to our internal stability as a country. There hasn't been a major war on American soil since 1865, and even that was a crushing victory for the federal government. South America has been subject to internal disputes over communism and cartels; Europe has Ukraine; China and India have had revolutionary changes in government.
Besides political stability, we have economic growth, which is the best way to fight inflation. If you print one trillion dollars, but GDP actually does increase by one trillion dollars, then there is less inflationary pressure on the currency. The fed's goal of 2% inflation per year falls in line with the target growth rate of 2% per year.
In addition to the political stability and economic growth of America, we also have a military that is willing and able to put pressure on "breakaway civilizations," like Cuba, Venezuela, Iraq, Libya, Iran, North Korea, and Russia. China is a big exception to this military pressure, but China's economy is deeply dependent on America.
Any way you cut it, via carrot or stick, it's very hard to imagine a global move away from the dollar. As long as 180 countries continue to trade in dollars, especially China, Europe, South America, and the Middle East, this has the effect of off-loading inflationary pressure onto the entire world.
If America was autarkic and didn't trade at all, then printing trillions of dollars would result in hyper-inflation. However, with the USD as the reserve currency, this inflationary pressure is distributed over a global economy. The dollar is effectively "soft pegged" to the Euro and to the majority of the world's oil trade (with the exception of Russia).
Pathetically, even the Venezuelans are forced to use dollars:
https://apnews.com/article/business-venezuela-caribbean-inflation-41edcf6e4a4c5010188a2921db642c39
Russian GDP is 2% of global GDP. The loss of Russia isn't that significant, but even if it was, Russia's trade in Yuan can be thought of as a proxy for the USD, because it is also pegged to dollar:
https://gjia.georgetown.edu/2022/02/11/what-is-holding-the-yuan-back-xi-is/
The debt will become a problem if:
1. American economic growth falls behind global growth (Japanese stagflation). This might occur if America pursues the Canadian/British immigration+regulation package. Although you could argue that California is already doing this, and it has much better GDP growth than Canada/Britain. It's possible that illegal immigration is a really good (slave) system for suppressing wages, and Canada/Britain don't allow for under-the-table cheap labor the way California does.
2. The American military stops pressuring "rogue states."
3. Global trade significantly decreases, to the point where America becomes semi-autarkic, and can no longer off-load inflationary pressure. This could occur as a result of an escalation in Taiwan, or if Trump abandons Ukraine and Germany is forced to rebuild Nordstream.