Something to ponder: The Economist reminds us that the recent declines of the US dollar, with respect to other currencies, constitutes--in real terms, for our creditors--the largest default in history.
The winds of history are filled with the remains of shredded paper as countries repudiated their debt obligations: Russia, Spain, Mexico, Argentina, France. Just to name a few.
We're different. We don't repudiate our debts. We allow currency adjustments to do the dirty work. It's different. It's not illegal. Nor even immoral. Nothing more than the invisible hand of the global free market, adjusting the US currency so the dollars we borrowed yesterday are worth much less today--and even less tomorrow.
And this has me wondering: Should we be proud? Because we got away with it? Does the world owe us this? And they're just getting back what they deserve? Or should we be ashamed--for jilting our creditors?
Irrespective of how elated or depressed we feel about it, Brad DeLong is concerned that the declines in the dollar may lead to a global crisis--and recession or depression.
If his fears prove true, then we've all been jilted.
