Forward Guidance
Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies
Dec 4, 2023
Dr. Barry Eichengreen and Joseph Wang discuss dollar dominance, problematic government debt levels, Modern Monetary Theory (MMT), and central bank digital currencies (CBDCs). They explore the challenges faced by emerging markets, the reasons behind the US dollar's dominance as a global reserve currency, and the potential future of dollar dominance. They also touch upon political polarization and government debt levels, the impact of artificial intelligence on productivity, and China's economic slowdown.
01:01:39
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Quick takeaways
- High levels of debt hinder productive investments and meeting social needs.
- Lowering the debt-to-GDP ratio requires favorable economic conditions.
Deep dives
The impact of high public debt on the economy
High levels of debt relative to GDP create headwinds for the economy, hindering productive investments in infrastructure and research. Debt also prevents governments from meeting important social needs and investment in defense and security. The level at which debt becomes problematic depends on the specific circumstances of the economy.
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