In Norway the government has targetet a deficit of 4% of GDP, which is financed by selling foreign exchange. The reason they cap the deficit at 4% is to avoid the norwegian krone to appreciate to fast, catching dutch disease.
From a MMT perspective, would it be wrong to “finance” some of the deficit spending in norwegian kroner when the norwegian krone is very strong, as currently, in an attempt to slow further appreciation. At least in the short term.
In that second graph, wouldn’t it be better to identify the vertical as Japanese credit rather than “public debt”? We the people don’t actually have to give Japan anything of value for those dollars, do we? It’s not like they can come and take possession of the Grand Canyon or New York Habor.
Is it not a good thing for foreign nations to use our currency?
Have you all looked much at the shadow banking system? Have been reading a few articles from over at zerohedge, and they seem to generally predict apocalypse as the US shadow banking system continues to delever (from a peak of ~20 trillion in ’08). They seem to be saying that the Fed will have to continue with QEnfinity just to keep up with all the credit maturing out of the shadow banking sector – or else we’d get deflation? They seem to then posit that all these trillions of QE will result in runaway asset price inflation from all the buying of treasuries, MBS, etc.