Leverage
Subject Theory of Value states that the very process of exchanging items lead to increase in wealth of society. If we look at this in the global trade context, we can say people in US are exchanging USD for goods made in foreign countries. People in US want the goods made while people in the foreign countries want the dollars and they are both happy, aren't they? Except ... sooner or latter people in US run out of USD and what do they do then ... Money Creation comes to the rescue!
posted by Nitin M. Shetti at
7:33 PM
2 Comments:
You don't "run out" of dollars. If the goods or services you import increase productivity, increase innovation, then you generate wealth. The increased wealth is then partly used to service and pay down the debt.
By
Anonymous, at 5:29 PM
Foreign countries created something of value and people in US bought it. Don't you find it a little fishy that people in US don't create sufficient items of value for people in foreign country which would cause an inflow of dollars? Increase productivity, innovation can generate wealth but this "wealth" is useful to people in the US only. This increased productivity, innovation, etc is not causing money to enter the US. Finally, who is paying for all this? The govt pays by inflation???
By
Nitin M. Shetti, at 6:47 AM
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