Thursday, August 31, 2017

America's Most Valuable Export Is Intangible And At Risk

A prominent economist reminds us about our most valuable export.  We export political stability and the rule of law by being a beacon to the rest of the world.  That gives us a quasi-monopoly on the production of safe assets.  The US treasury can sell bonds at extremely low interest rates because they are regarded as a safe asset.  The demand for safe assets is very high, and the US is has become a haven for safe assets that are demanded by central banks and global investors.  That has been called an "exorbitant privilege" for a good reason.  It can be a temptation that encourages the government to spend more than it raises in taxes.  Therefore, we must manage our fiscal policies with care in order to maintain our "exorbitant privilege".  We must also maintain our political stability and respect for the rule of law.  The direction of our fiscal policy is uncertain and at risk and our president shows little respect for the rule of law.  His political strategy is also based upon dividing the country.

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