General Discussion
In reply to the discussion: If corporations are engaging in a "capital strike" [View all]Sen. Walter Sobchak
(8,692 posts)The first one spells it out in plain english in the final paragraph, what might happen vs. what has actually happened and why.
The second article is just stupid because it makes the ridiculous assumption that there is a zero-sum game involved and any capital outflow is 1:1 forfeited economic growth. This is a ridiculous statement because much of the demand for the imported goods was driven by price elasticity in the first place. The consumer spending boom was driven by people spending cheap money on cheap junk - this growth would not have occurred without low-cost goods and cheap money which would have been sapped by his primary argument below.
The meat of the article about foreign government borrowing is nonsense, particularly what it would have done to interest rates, except he frames that as having been positive.
So much money, at such low interest rates, would not have been available if we had confined ourselves to domestic sources of funds; the upwards pressure on domestic interest rates would have choked off government borrowing at some point.
Sounds like something Grover Norquest would say... That would have pushed the US into default. If we are going to run trillion dollar deficits for the foreseeable future that would be a disastrous policy amounting to a permanent liquidity crisis as government borrowing would potentially suck all the air out of the room. If the rest of the world wants to underwrite our profligate spending - well good on 'em.
Globalization has been an ongoing process for millennia, if you want to champion the US becoming road-kill in a changing world that is up to you. Thankfully the President and Mr. Kirk are slightly more pragmatic than whiners calling for revolution from their parents basement.