Saturday, August 23, 2008

No mystery

Paul Krugman does not understand why the world's economies are as coupled as they are.

I'd say it has something to do with the fact that the world runs on the dollar as a reserve currency, and when the dollar money supply grows, the world grows, and when it shrinks, the opposite.

This "linkage" across the globe does not connect all countries equally. For example, if Germany was slumping into depression, the US would not notice.


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