Imagine that you are the finance minister of a small, developing country that has just discovered an ore belt rich in cobalt, a metal that has more than doubled in price over the last five years. You, a capable technocrat, are familiar with Dutch disease. You know that the sudden discovery of reserves of a high-value commodity can cause sclerosis in other industries, particularly manufacturing, as happened in The Netherlands after the discovery of natural gas in the late 1950s.Now: imagine you are the Secretary of the Treasury of the United States of America. For "cobalt-rich ore," substitute "dollars," or "dollar-denominated assets," or perhaps just "Treasuries." You still need to worry about Dutch disease. We just never talk about it that way, because the whole framework of
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Imagine that you are the finance minister of a small, developing country that has just...