WSJ on wealth

[Brad De Long]

>Brad DeLong wrote:
>
>>  As long as the U.S. foreign debt is denominated in dollars, I ain't
>>  worried...
>>
>>
>	You seem to be saying that as long as our foreign debt is in
>dollars, we can always pay down our debt by printing more dollars. But
>couldn't that just scare investors even more, causing them to shift their
>money into euros? And couldn't it effectively spell an end to the era when
>America could habitually run big, chronic external deficits?
>
>	And if America couldn't run big, chronic deficits anymore, how would
>the world economy keep growing? After all, didn't U.S. imports represent
>something like half of 1998's world GDP growth? Those imports were financed
>by foreign borrowing, right?
>
>	Seth

Oh, that would be bad. But if our foreign debt were denominated in 
euros or yen, things could become much worse...

Brad DeLong
-- 

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
"Now 'in the long run' this [way of summarizing the quantity theory 
of money] is probably true.... But this long run is a misleading 
guide to current affairs. **In the long run** we are all dead. 
Economists set themselves too easy, too useless a task if in 
tempestuous seasons they can only tell us that when the storm is long 
past the ocean is flat again."

 
--J.M. Keynes
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
J. Bradford De Long; Professor of Economics, U.C. Berkeley;
Co-Editor, Journal of Economic Perspectives.
Dept. of Economics, U.C. Berkeley, #3880
Berkeley, CA 94720-3880
(510) 643-4027; (925) 283-2709 phones
(510) 642-6615; (925) 283-3897 faxes
http://econ161.berkeley.edu/
<delong at econ.berkeley.edu>