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Joined 2 years ago
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Cake day: July 3rd, 2023

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  • But we’ve made every payment on that debt since we started borrowing. If lenders can’t count on those debt payments, they lose some faith in the currency that undergirds the world economy.

    This is quite bad, regardless of where you live.

    Future borrowing, both public and private, becomes more expensive (higher risk demands higher returns). This is bad if you live in the US.

    People involved in international trade start questioning if the USD is really what they want as the reserve currency (the Dollar is the go between for all other currencies, so if you’re in Europe trading with Japan, you exchange euros for dollars for yen, which while a bit cumbersome, is wonderfully predictable) and what they might want to use instead (euros? renminbi? rubles? The chaotic world of direct exchanges of currencies?). This is bad if the country you live in imports goods that you need or exports goods that other people need.