hi, is crowding-out happening in the U.S? if it is true why doesn’t $ appreciate as what is shown in the book? correct me please. I know it is NOT gonna be on the test. Relax.
from what i’ve read/heard, there is an even bigger problem than crowding out… forgot what the exact term is, but something like ‘intergenerational debt’ or some sht… basically, the US is running MASSIVE budget deficits… and the spending doesnt seem to stop, with the war in iraq and whatnot… anyway, they say that, eventually, these debts have to get paid… and who’s gonna pay it? the next generation… in terms of your question though, there are many many factors at play, so maybe, if all else was constant, than bigger budget deficits will cause the crowding out effect…but this effect could be negated by alot of other things…
for crowding out to appreciate currency…interest rates need to rise…however interest rates are not rising because of the mortgage crisis.