Actually to tie this point in with the inflow of capital point made by K. Spain also had large inflows of capital which resulted in a lot of private debt. The problem was this capital flowed towards housing.


I think that it is worth addressing where the foreign capital inflows are going and what the governments are doing to guide that investment. This includes both the US government and foreign governments.

 

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No, it always isn't. But it is obfuscated by comments like your own.

In a world of multinational corporations, the center does not hold in your argument.





You do. But those with oversimplified or disingenuous arguments often try to equate a 'stable dollar' with a 'strong dollar', when in fact these two things are not necessarily the same.

 

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What do you think multinational corporations have to do with national accounting?


How does a basic primer on capital flows and budget deficits confuse the issue?


You do see people confuse levels (strong dollar) with flows (stable dollar). Its not clear what you are saying exactly, maybe you are the one confusing the two here.


A consistent trade deficit should force a lower currency valuation until the trade deficit is eliminated. Thats what floating currencies are supposed to do. A consistent trade deficit implies an overvalued currency. If you want to keep the dollar stable while the market indicates it should be falling, you are arguing for a strong dollar. This is true even if the dollar has been stronger at some point.


I dont think its automatically right or wrong to decide we need a stronger or weaker dollar as long as you recognize the impact. Both positions have plusses and minuses...its just frustrating to see people with strong feelings about the deficit who are prescribing currency policy that counters their preferred deficit policy. All this stuff works together, there is no magic fairy that allows us to ignore the basics of accounting.

And there's where the conversation diverges into a novel, not a board post. And again, you know that. Just like you want to gloss over the whole point about "stable" versus "strong" currency.

You casually say "floating", but what you really mean is "centrally managed and intentionally manipulated fiat for deficit or inflation intervention", not a "stable" or "neutral" currency that naturally values/de-values based on market and trade factors.

The nature of that intervention, particularly for the benchmark world currency that glues together multinational finance and arbitrage, is the topic of entire schools of economics.

 

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And now that we've entertained your drivel... NONE OF THAT has shite to do with the need to cap and balance the budget on a deliberate schedule under a constitutional mandate.

 

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Damn AA, you have been trying to get this conversation going for awhile now and you have failed hard.


It is hard to watch.

 

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You're under the impression this is a conversation? Look back at the OP. That's not an inquiry or solicitation of opinion.

 

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Yeah it has been hard to watch from the first post.

 

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@SoO: Yes this thread has been painful to watch. In fact I commented on that already.

 

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America will no longer be a super power in fifty years

 

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