Nice summary of US world role: a) bond exports reflect the dollar international hegemony, allowing, with a “convenience yield,” domestic expenditure above production and net FDI i.e., the dollar “exorbitant privilege”(VGD) and the “US as Banker of the world”(Gourinchas & Rey);1/3
b) the FDI positive net income reflects a bonanza for shareholders of US international firms;
c) the industrial deficit points (approximately) to the loss of manufacturing jobs.
A striking chart in the @Brad_Setser
blog cfr.org/blog/five-poin… 2/3
c) the industrial deficit points (approximately) to the loss of manufacturing jobs.
A striking chart in the @Brad_Setser
blog cfr.org/blog/five-poin… 2/3
There is, of course, a cost for the dominant currency: the “exorbitant duty” of incurring capital losses when in recessions international assets lose value aggravated by the currency appreciation. In 2007/2009 those US losses were significant (G.&R.&G.)3/3
imes.boj.or.jp/research/paper…
imes.boj.or.jp/research/paper…
