Ever wondered how the United States can print money at will and yet face huge economic challenges? It turns out the answer isn’t as simple as comparing a government to a household budget. The US, as the issuer of its own currency, can never truly "go broke" in conventional terms. Instead, it finds itself stuck with a tricky policy trilemma that could reshape the global economy.
On one hand, cutting spending to calm bond markets might shrink the economy and deepen social divides. On the other, continuing fiscal expansion through constant bond issuance could inflate the financial sector and risk a loss of confidence in US Treasuries as the world’s safe asset. And then there’s the daring option of reforming the entire system—a move that could regain fiscal control but might undermine the longstanding global role of the dollar.
This complex scenario hits even closer to home for the Global South. As these nations look beyond the established order, many are exploring fresh economic strategies to reduce dependency on policies that may eventually falter. It’s like leveling up in your favorite game—challenging paths that come with risks but also open the door to exciting new opportunities. 🚀🌏
The evolving interplay of these policies isn’t just a US problem—it’s a global discussion that could direct future alliances and economic strategies. As debates intensify and traditional assumptions come under fire, keep an eye on how these shifts might affect everything from local economies to international markets.
Reference(s):
Beyond the dollar: The Global South's exit from US fiscal fragility
cgtn.com
