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519 sats \ 8 replies \ @siggy47 2 Nov 2023 \ on: Meta Econ Takeover Day 16 meta
I posted a specific example on the book club link, but generally speaking, it has turned the U.S. into a nation of consumers, with imports exceeding exports, and forcing the economy to be disproportionately weighted towards services.
Orientation of the economy towards services also makes economic value creation harder to measure.
Example: Make the tax code complicated and all of a sudden you have higher demand for accountants and a larger accounting industry. This growth in accounting is measured as economic output. But the value of this is really just mitigation to previous value destruction, rather than the creation of new value.
It's hard to know how much of the growth in service industries is true value creation versus rent-seeking.
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Very true. Legal services for compliance? Make work to wade through bureaucratic red tape.
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So that's a separate way that fiat is privileging those with high time preference
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Rewarding consumers and borrowers, while punishing savers, though I'm not sure if it applies specifically to the petrodollar or more generally to the fiat system.
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In this case, I think the reserve currency designation is key. Other countries cannot easily export their inflation.
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Definitely true. I kind of see that as a benefit of reserve currency, not an "undesirable effect".
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I'm taking your original point as pointing to a distortion in the economy, which is undesirable if we separate it from the benefit of being able to buy real stuff with fake money.
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Certainly. My point is that we can't lose sight of the fact that the U.S. consumer benefits from the "inordinate privilege" too. The U.S. has experienced inflation, and it's gotten worse recently, but inflation has been worse for every other fiat currency in the world, because we can export a chunk of our inflation. The whole world helps pay for U.S. QE. That's why it kills me when Yellen brags that inflation is worse everywhere else than in the U.S. No shit! The U.S. weaponized the dollar.
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