Ep. 280 The Theory and History Needed to Refute Keynesianism and MMT
Bob Murphy Show
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The Effect of Interest Rates on the Dollar
Before when the government was running a two trillion dollar deficit it wasn't being financed purely by americans some of it was being financed by foreigners in the general case. Now if that gets cut off something has to happen so that foreigners don't want to invest in treasury debt as much and so we've always explained what happens as interest rates fall especially particularly on government debt. So now just think through that logic though if foreigners now you know some institutional money manager in japan who before spent a bunch of yen buying the equivalent of a billion dollars worth of treasuries last year now doesn't want to buy any of them. That's fewer yen that are going into the currency markets the forex
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