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RE: Have You Heard of Modern Monetary Theory?

in #dtube7 years ago

America gets away with their large debt and printing of money because the American economy is very strong compared to the world, and that America has the most political and cultural power out of any country. Most currencies are dependent on the USD being stable for them to have value, including the Chinese Yuan. Although Asia won big during the GFC, they were only able to take advantage of the situation, which a number of countries could have done.

Another reason is that the US national debt has not exceeded the GDP. If it does exceed GDP the economy will start to fall since trust will decrease significantly. America can keep piling up debt as long as the GDP grows consistently, which it looks like it will for a while to come.

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They get away with their large debt because it isn't really a debt. For example, the portion that is Government securities is nothing more than a type of savings account. To pay it back, all the Government has to do is shift the balance from the savings account (securities account) to the deposit account (reserve account). Almost the entire debt would be wiped out at a keystroke.

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