A Surfeit of Dearth Revisited: The Global Shortage of Safe Assets
global economic growth over the past few decades has outpaced the capacity of the world economy to produce truly safe assets
Really? The U.S. could have just deficit-spent more, crediting people’s/businesses’ checking accounts and thereby increasing the global stock of the world’s safest asset: U.S. dollars.
It could (by U.S. law is required to) simultaneously issue bonds in/borrow an equivalent amount, but it comes to the same thing as regards the inflationary impact. (Issuing bonds is actually a bit more inflationary because of the future money-creation needed to pay the interest.)
That fear of inflation — and the resultant unwillingness to provide the safe assets that Beckworth thinks the world needs — is the only constraint on Beckworth’s “capacity.”
If he is correct that the supply of dollars is, has been, insufficient to meet global demand, then inflation is not currently a concern — arguably quite the contrary.
Cross-posted at Asymptosis.
This is such BS — the global saving glut is just from the middle-class economy bleeding off money and not getting it back as wages.
It’s not so much that we’ve had global economic growth, but that an ever greater percentage of money has gone into finance rather than business; Wall Street rather than Main Street.