DO NOT do as America does, unless you are a very big country (or economic bloc). That seems to be the lesson Britain is learning as the pound weakens and confidence in the credit worthiness of the country slips. If you have a global reserve currency, if private demand for your debt is strong, if the flight to safety means that government borrowing costs remain low no matter how profligate the central bank, well, then you can do as America has done. If not, better prepare to have your capital dubbed "Reykjavik-on-Thames".
January 23, 2009
Do as I say, not as I do...
Says the economist "The Dollar is Special":
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