And therefore, since the national government is the monopoly issuer of fiat currency, the serious threat is in the external accounts and the risk of a meltdown in the foreign exchange rate. A structural imbalance of the external accounts is part of the story in all the hyperinflationary episodes that I can bring to mind, with notable examples from the Confederate States of America in the 1860's through the Wiemar Republic, through Brazil in the 1970's, through Argentina at the turn of this century.

The US has had average current account deficits exceeding our average growth rate over the business cycle since the 1990's ... and one useful thing about jumping up and down about the nominal dollar value of the government debt is that it distracts attention from the deficit that is a far more serious long term threat to economic stability.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.