Sabri wrote: > Hyperinflation happens for one reason only: foreign debts denominated > in foreign currency. Foreign debts denominated in domestic currency > and American exceptionalism are the same thing, because the USA has > been the only country in history with foreign debts denominated in > domestic currency.
In principle, I see no reason why you cannot have hyperinflation with debts denominated in domestic currency. Imagine a single state issuing a global currency and public bonds. No foreign debt there, all debt is domestic. Isn't it conceivable for the debt and currency issued by this state to depreciate at once? Why not? The state is not God. Even a global state can melt down. At the end of the day, the liabilities of the state are just like any other liabilities, as much as they may appear to be backed by massive force. Therefore, currency and debt are absolutely susceptible to depreciation, which can happen fast or slow. It depends. (What comes to my mind is Alan Blinder's EEA piece on the USD as an international reserve currency.) But suppose what Sabri says is a fact (which, I argue, is not), are we supposed to believe also that it is impossible for the U.S. government to face a situation in which rolling over its foreign debt runs into difficulties? May I just add here that I'm not predicting a global Armageddon just yet. I just argue that these scenarios are not to be ruled out *in principle*. Although, on second thought, I wonder now whether Sabri and Shane are just trying to hype their retirement portfolios by making us buy Treasuries and be the suckers! Yes, that must be it! Look again at the Yahoo finance chart that Sabri linked. Doesn't that look like a big bubble to you?[*] [*] Hey, I'm joking! :) PS to Shane: I posted on my Facebook page a graphical response to your question of whether there's been hyperinflation anywhere with massive unemployment but no war. Yes, indeed. And that's not the worst case in history. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
