Word: dollarization
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Dates: during 2000-2009
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There's not much to add to the first point - that really bad stuff can happen - other than to note that capitalism has just experienced the equivalent of a meteor near miss. But the second and third points demand more explanation. The reason a big federal debt undermines the dollar is that a government with really big debts will be tempted to inflate its way out by printing money to pay creditors. Printing more dollars (the process actually involves the Federal Reserve's purchasing government securities with dollars it conjures out of thin air) reduces the value of existing dollars...
Then there is the creaky contraption that is the global monetary system. Since the early 1970s, the world's major currencies have generally been allowed to float freely against one other, but lots of emerging-market countries link their currencies to the dollar. They began doing this to secure a bit of stability in turbulent currency markets...
...problem is that after a decade of strong growth in China in particular, we now have an unbalanced system in which the dollar is overvalued against the Chinese yuan (among other emerging-market currencies). That has contributed to big U.S. trade deficits and, as China built up a huge stash of dollars it needed to put somewhere, to the credit bubble that precipitated the financial crisis. There's widespread agreement that this setup has to change but little agreement about how to change it. Which is a risky situation...
...understands global monetary arrangements; the best that experts in the field seem to be able to do is worry vaguely. So what are the rest of us to do other than worry vaguely? Think twice about traveling to Europe, maybe, because it's really expensive. Hope a somewhat weaker dollar will help revive this country's beaten-down manufacturing sector - as seems to be happening - but also hope a dollar slide doesn't turn into a collapse. And put at least some of your money into investments (foreign stocks, gold, other commodities) that stand a chance of thriving even...
...ideal health care system is one designed to deliver the maximum value for patients, measured by the health outcomes achieved per dollar spent,” Porter said...