Remember “mutual assured destruction?” MAD was the dominant principle of the Cold War: The Soviet Union would not attack us as long as we retained the ability to retaliate. They might surprise us and obliterate New York, Chicago, Los Angeles, and Washington, but our nuclear subs and hardened silo-based missiles would respond in kind, turning Moscow, Leningrad, Kiev and Vladivostok into historical footnotes (if mankind survived to write any more history).
A kind of financial “MAD” became our consolation in the 1990s as China continued to accumulate foreign exchange, the vast majority of which was in dollars (or financial assets like bonds that were priced in dollars). At present, China’s holdings of dollar assets top $1.5 trillion, says the Peterson Institute for International Economics.
When I was a child, my grandparents hosted a gift orgy on Christmas Eve—the whole family gathered in Chicago and every aunt & uncle brought something for ME. My cousins and I had eyes only for the pile of gifts under the tree.
Remind you of the American Recovery and Reinvestment Act (ARRA)? The ARRA orgy begins with the reasonable assumption that the economy needs a healthy dose of Christmas cheer. Congress and the Administration joyfully decreed that we could save the world and spend money, too. Every lobby and interest group joined in the happy chorus. Presto! Christmas in February.
Yet “killing two birds with one stone” only works if you’re a very good shot. ARRA is riddled with Congressional multitasking, using the occasion of the stimulus (and its virtually unlimited spending) to implement specific social goals.
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Remember “mutual assured destruction?” MAD was the dominant principle of the Cold War: The Soviet Union would not attack us as long as we retained the ability to retaliate. They might surprise us and obliterate New York, Chicago, Los Angeles, and Washington, but our nuclear subs and hardened silo-based missiles would respond in kind, turning Moscow, Leningrad, Kiev and Vladivostok into historical footnotes (if mankind survived to write any more history).