[pohart]

As another Eco Major I think I agree with you. The problem is that runs on banks are like a giant prisoner's dilemma. Everyone is better off getting out if there is a problem, and no worse off if there is not. What he is talking about is similar, and even if the politicians from the other countries realize what is happenning, they will probably be more likely to do what the people want so they can an keep there jobs and be on top during the depression than to try and save the world economy and end up out of office.

[dejb]

I agree that it is like a prisoner's dilemma. Perhaps more like the iterated version which does actually allow for cooperation to be the optimal solution.

I think countries holding large amounts of US dollars have a large incentive to talk up its value while quietly selling it off.

However those countries can probably use their influence over the US dollar to influence US policy and perhaps that is a benefit they have factored into to their currency holdings.

I'd say the chances of a collapse are unlikely unless the US decides to play 'chicken' with its creditors and is unwilling to align its spending and earnings.