In today's episode, Noah Smith and Erik Torenberg answer listeners' questions and discuss global economic issues such as China's demographic challenges, currency crises, GDP vs. GDP per capita, the efficacy of long prison sentences, and the risks and benefits of economic stimulus, currency depreciation, and trade imbalances.
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Highlights from the Episode:
The U.S. trade deficit represents IOUs to other countries that must eventually be paid back or partially defaulted on through inflation. A persistent trade deficit is not in America's long-term interest.
There are two main types of economic crises: currency crises (typically involving inflation) and deflationary depressions. They require opposite policy responses - austerity for currency crises and stimulus for deflationary depressions.
China is currently experiencing a deflationary crisis due to its real estate bubble burst and debt overhang, leading to falling prices and attempts to export their way out of trouble.
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LINKS:
Noahpinion: https://www.noahpinion.blog/https://www.noahpinion.blog/p/good-cities-cant-exist-without-publichttps://www.noahpinion.blog/p/macroeconomics-the-predator-of-foolish
China's Demographic Time Bomb and America's Economic Future | "Econ 102" with Noah Smith and Erik Torenberg podcast - Listen or read transcript on Metacast
