[somenameforme]

It's not really the economy so much as international economics. The term to look up here is 'exporting inflation.' [1] Historically the US was able to engage in what would be unsustainable economic policy for most nations, but kept it going by exporting the normal consequences (inflation) of such. There's a lot of nuanced reasons for this but one of the most simple is that we were the largest consumer economy by an extremely wide margin. So imagine there's a place Carlandia - whose economy is largely driven by exporting cars to the US. And we print a bunch of money so the dollar starts to dump in value. Ostensibly this would initially be really nice for Carlandia because each of their cars would sell for even more dollars.

But in practice what happens is that Americans would simply stop buying so many cars from you, and then Carlandia's economy would start to tank. But there's a simple solution. Carlandia intentionally starts to devalue its own currency, precisely to maintain stable trade levels. So they do precisely this, as do other nations around the world. But as prices around the world start to normalize the inflation disappears, but the money we printed doesn't. So this gives us the freedom to print money and have it disproportionately end up being "real" as opposed to just inflationary, as it would be for most other nations. So you basically get a 'print GDP' button.

But this is also a liminal state of affairs. Not only is the world going multipolar but other economies are growing much faster than ours meaning are gradually losing dominance in terms of being a key market target. If we're not able to export inflation and demand/dominance of the dollar starts to slide, then things are going to get rocky, fast.

[1] - https://search.brave.com/search?q=exporting+inflation

[hollerith]

You've successfully argued that the effect is real, but not that the effect is so large that

>If we're not able to export inflation and demand/dominance of the dollar starts to slide, then things are going to get rocky, fast.

[somenameforme]

It's really hard to answer this in brief, because there are so many critical issues that run parallel. I tried to keep this post brief, but well... failed. I suppose I'll go with the Mark Twain quote, 'Apologies for such a long post - I didn't have the time to write a short one!'

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To answer this question, I think it's important to answer another question. Why can't a country just print their way to economic growth? Why can't Columbia, for instance, just print trillions of dollars worth of Columbian pesos, spend it, and become an economic superpower next year? The reason is that the prices of things is little more than a balance between supply and demand. If you increase demand a bunch (by giving people lots of money that they now want to spend on all sorts of things) but supply stays the same then all you do is send prices skyrocketing and create general economic chaos.

So normally to see "real" economic growth you need to increase your supply of things while also simultaneously increasing consumption, so you don't just result in over-production and plummeting prices. And this is really hard to do. But for the US we don't really have this problem. We were able to print money, and have that inherently result in an increase is supply as other countries weaken their currency to keep pace with the now weakened dollar.

This is a superpower. This is why as other countries now bicker over what will replace the dollar, nobody wants any single country in control of the global currency. It's simply far too powerful - both as a weapon and as a tool for "unfair" economic growth. Incidentally this also happened in the past. We had a global system setup in place to prevent the US from dominating global economics called Bretton Woods. [1] The USD was exchangeable, at a fixed rate, to gold by other governments. So if the US ever started printing an excessive amount of money, other countries could collect the weakened currency and exchange it for a bunch of gold, making a bunch of profit and also effectively punishing the US in the process.

So in 1971 exactly this happened with the French trying to trade in dollars, which had been quite recklessly printed since the 60s, for gold. But Nixon chose to default on our obligations and completely withdraw from the Bretton Woods Agreement. This led to a great quote from the time that "The dollar is our currency, but your problem." from Nixon's Secretary of the Treasury. This was almost immediately followed by setting up the Petrodollar in 1973, where oil would only be traded in USD - simultaneously allowing the US to start printing an arbitrary amount of dollars, but also ensuring it would remain the global reserve currency, by making it impossible to access oil without it.

So basically our modern economic system began in 1971, and you can see it as a huge inflection point for all sorts of issues related to the economy. [2] It resulted in tremendous growth, but also lots of problems. And once the dominance of the dollar ends, so will this era of economics.

[1] - https://en.wikipedia.org/wiki/Bretton_Woods_system

[2] - https://wtfhappenedin1971.com/