By: Spearkite

Spearkite
Sun, 19 Jan 2025 20:43:49 +0000

Always good to see a sober economic analysis. The US has a high debt tolerance only because of the Dollar’s position as the global reserve currency, and that position is coming under attack. Nations which are hostile to the US have seen how the Dollar can be weaponised against them, and are understandably keen to create a financial system which is less dependent on the US currency. If that happens, the debt levels in the US will crush the economy.

The difference between the US and other nations is that the economic collapse of the US would break the world’s financial order (the failure of other economies would cause a major shock, but the global financial system would most likely survive). Such an outcome is not to be welcomed – all of us would basically become penniless paupers almost overnight.

The use of debt to finance growth, even illusory growth, impoverishes everyone who is dependent on a wage and/or savings, but enriches those who hold assets which maintain or increase their value.