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Nobody is making fun of deficit hawks anymore
The common-sense notion of the U.S. national debt is that we can’t keep running up deficits forever. Typically, people who hold this notion are looked down upon by people like Paul Krugman. Paul would like to think that you are some backward ‘hick’.
To be sure, it could take a long time before we saw bad consequences. But the point is that the U.S. having the dollar as the world reserve currency is not set in stone. It’s not as if money didn’t exist before the 1940s. Really, people need to understand that there is nothing inevitable about the U.S. dollar as the world reserve currency.
The U.S. dollar is backed by force/taxation. It is also backed by Treasury bonds. With Treasury bonds, you have to worry about inflation. We all know that the U.S. probably won’t hard default. Rather, they will default through money printing, which is a soft default. People like Modern Monetary Theorists aren’t saying anything new. We all know that the risk with the U.S. debt is inflation risk, not bankruptcy or hard default.
The Federal Reserve owns a huge chunk of the U.S. national debt, which is kind of like taking out a new credit card to pay off your other credit…
