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Old 2008-11-20, 10:31   Link #53
Join Date: Nov 2008
Originally Posted by ShimatheKat View Post
Well, remember that although neither Russia nor China can print money endlessly, the US can. It might well do so soon. Soon the USD and the SGD will be on par. Right now, it's at USD1 - SGD1.4. It was, 5-10 years ago, USD1 - SGD1.8.
No actually. It would work that way only if the USD had not become the reserve currency of the world, hence rest of the world = over-leveraged dollar ETF. Fed deciding to use it's powers to perform an inflationary shock at this stage would be the final game over stroke for Russia as an economy. The US exports inflation. There is a reason for this. The balancing act comes in forcing another country to inflate faster through collapse. That is where we are at now. For a long time (the past decade or so) other countries have received very favorable terms in exchange for using the USD as a medium. Deflation is killing everybody who thought the good times would last forever.

Originally Posted by ShimatheKat View Post
It's not so much of financing a war that is the question. It's HOW MUCH GAIN can you get out of it. For Japan and SKorea, it's huge. They are at odds (even greater than US at times) with NKorea. For SKorea, it's they would have FINALLY won a war stretching on for 50 years - the Korean War is still technically on, since SKorea didn't sign the treaty.

Printing money isn't a huge problem. When one party captures another land, they have more to sell, to get money. In a war, it's not about money - it's about your weapons. US and Russia have lots of them. To them, war isn't difficult to finance. It's when they rope in their allies (Japan and SKorea for US, NKorea and others for Russia) where the money problem comes in.
Then it becomes a Money No Enough issue. That's why all the nations at the six-party talks are more or less Just Following Law.

In fact, it is when there is not enough money, when a war starts. No, really. Germany after WWI and Treaty of Versailles was a poor nation. That's how Hitler came to power in the first place - by promising a Germany for Germans.
Unless we're talking nuclear war, in which case I don't see why alliances would even matter, money does matter. How much is spent in Iraq? Weapons take a lot to maintain. Money has to come from somewhere. Borrowing excessively externally leads to bond market dislocations and other nasty side effects. Printing is highly inflationary internally. Globalization hurts for anybody who thinks they can pull it off unless they are a self sufficient nation. We are talking about the current regime. They will be busy controlling their civilians. Hitler coming to power was a result of the economic collapse which resulted in a regime change. Now if we do see a regime change and East Asia somehow manages to extricate itself from being a de-facto part of the US economy what I say would be null and void if the people could be rallied against an external force. But we certainly aren't there yet.
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