Tuesday, November 25, 2008
Another ridiculous article by a journalist who doesn't understand floating exchange rates and the difference between currency issuing nations that spend by crediting bank accounts (and Britain is one). There can never be a payments crisis or bankruptcy.
If this guy Ambrose Evans-Pritchard wanted to write about such a possibility he should focus on Germany or any nation within the Eurozone. These countries are no longer currency issuers and are completely constrained by the total amount of savings of their citizens and the nations' ability to borrow. They can go bankrupt. Britain, U.S. Japan, etc. can't!