The end of the Euro | 276 comments (276 topical, editorial, 0 hidden)

I don't think he sees people not ... (none / 0)

... accepting the US dollar. The terms of trade dropping, sure, but a floating exchange rate most commonly melts down when there is substantial debt denominated in foreign currency, and since the US is not in that position, a slide in the exchange rate without a meltdown would ensure that people keep accepting the US$.

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

by BruceMcF (agila61 at netscape dot net) on Tue Aug 16th, 2011 at 01:12:52 PM EST
[ Parent ]

Re: I don't think he sees people not ... (none / 0)

A sufficiently substantial (and, more to the point, sufficiently rapid) deterioration of the terms of trade would be quite painful enough that you would want to avoid it.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 16th, 2011 at 01:57:13 PM EST
[ Parent ]

Re: I don't think he sees people not ... (none / 0)

How much disruption is caused if the US dollar drops in value, say, by 50% on a trade weighted basis ... and how much disruption is caused if the US$ is not accepted as payment ... are two categorically different questions.

In the latter case, you are talking about 2/3 of US petroleum supply no longer arriving, except on barter terms or by diverting funds from exports that have earned hard currency.

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

by BruceMcF (agila61 at netscape dot net) on Tue Aug 16th, 2011 at 06:50:26 PM EST
[ Parent ]

Re: I don't think he sees people not ... (none / 0)

Whereas in the former, petroleum prices only go up by something on the order of 100 %.

Which couldn't possibly cause riots.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 17th, 2011 at 04:03:55 AM EST
[ Parent ]

Re: I don't think he sees people not ... (4.00 / 2)

Precisely. We've had gas prices double several time in the past forty years, and it never caused widespread rioting. Recessions, sure, but not riots.

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

by BruceMcF (agila61 at netscape dot net) on Wed Aug 17th, 2011 at 07:00:22 AM EST
[ Parent ]

The end of the Euro | 276 comments (276 topical, 0 editorial, 0 hidden)

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