When they deficit finance by auctioning bonds, do you think they're hoping more or fewer people bid on them?
You have to think on the margins with this stuff, not in absolutes.
That said, my sense is that Krattert had the Middle East in mind, more so than Latin America.
Let's do take the Middle East. Why do the Emirates do so well? Why are they unscathed while their profit on their resources? Even Russia is, amidst a war, still selling its resources, specially titanium, to the USA. If they do commerce even being sworn enemies, why would the USA govt turn allies into foes anywhere else? The same "destabilization" theory as been repeated here tirelessly and when you go to the sources it turns out it's never true. I'm not saying that the USA govt is an angel, but those "death spiral" theories are just flawed, numbers don't add up.
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I'm not as familiar with this as you seem to be. I recall reading about this in Development Econ courses I took a long time ago, but it wouldn't surprise me to learn that reality differs from what was being taught.
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We too were early indoctrinated into this "destabilization" theories, as an explanation for Argentina's pitfalls. The first clue is realizing that those "destabilization" schemes exclusively appear as an excuse dying socialists regimes instigate into its population. How does it come it never happens in democratic, capitalist countries, is a mystery.
We are fortunate enough to have people from those "destabilization" times still living, and by a fortunate alignment of planets so I happened to cross many in my path. None of those theories were true, not one, not once. The reason for my fortune in my early awakening was my decision to study Aeronautical Engineering, which as a remnant of the old regimes is tied exclusively to the Air Force, which thus was tied exclusively to politics. So I met the very people that lived in those times, and they are always roaring outspoken in their indignation at how obscene are the lies people were told, but that was pre-X era so their reach was always tight as if it was a secret. It also shocked me that the truth was calmly walking there in plain sight all the time yet invisible due to limited reach.
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I'm not understanding your point, could you expand please?
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With thinking on the margins, I'm saying that even relatively small holdings help support a more manageable financing cost for US debt. Over time that adds up and enables more spending. It's not about comparing the impacts of huge aggregates.
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I agree but you used as an example USA bonds and that's what I was saying: the USA use their own people to pay for such massive expenses, not the little 3rd world economies which have the level of just one Argentinian province and we still are underdeveloped and dwarfed against Brazil, not even thinking about comparing to the USA.
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Ok, I didn't get that you were excluding countries like Argentina and Brazil. When people talk about "smaller" economies in the US, they usually mean anything significantly smaller than Russia.
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