1) According to a global strategist at Rabobank, “Past an unknown critical threshold, [using monetary policy to deal with public deficit] could see the collapse of US dollar currency hegemony as people lose faith in it. All systems can only be pushed... https://www.scmp.com/economy/china-economy/article/3094416/us-dollar-risk-sudden-collapse-ex-imf-official-warns-blow?utm_source=Twitter&utm_medium=share_widget&utm_campaign=3094416

2) so far. Does the world still want a US-dollar-centric system if US dollars are openly printed to fund the state spending that drives the external deficit?”

Contrary to what he thinks, the answer is: yes, the world does, as long as it can benefit from net US demand. Both...

3) this strategist and the “ex-IMF official” cited here, currently a professor at Tsinghua University, seem to be muddled in their thinking. “State spending” does not drive the external deficit of the US. It is the other way around, as I explain in... https://carnegieendowment.org/chinafinancialmarkets/70042

4) the essay cited above. This persistent myth is based on an outmoded set of circumstances and should be abandoned. Foreigners are not acquiring dollars as a discretionary act of kindness to fund US borrowing. They are acquiring dollars against American needs because their...

5) deficient domestic demand leaves soaring unemployment as the only alternative. They have no choice, in other words, and as a result the US has no choice but to absorb their demand deficiency with additional debt -- to its cost.

It is typical of the finance industry that it...

6) uses the bogeyman of a weaker dollar (which would be good for US manufacturers, producers, workers, farmers and small businesses, and bad mainly for global bankers) to warn against fiscal spending to help get the US economy out of its Covid-19-induced hole. But in fact a...

7) contraction in the US economy is more damaging to the US balance sheet – even ignoring the problems in general welfare – than an expansion in US debt. This is just arithmetic: it is not only rising debt that can make a country’s debt burden worse; contracting GDP will do...

8) the trick just as effectively, and in a world facing a severe demand shock, the best way out is to boost demand, or at least to prevent it from contracting further.

For me a more reasonable concern over US fiscal and monetary expansion is that if other countries don’t do...

9) the same, they will share in the benefits from the resulting US expansion, while forcing the full cost onto the US. Perhaps the US should take steps to limit the outflow of demand. We may need the modern equivalent of FDR’s “bombshell” at the 1933 London Conference.

PS Rabobank sent me the research report from which the quote came. It was taken out of context and I take back my criticism. The research piece is actually a pretty good:

https://services.rabobank.com/publicationservice/download/publication/token/rCsg9NGndF04HlSAGxa4