[ARCADIA]

If you loan me $100, and I devalue the dollar by half, then I simply need to pay you the equivalent of $50 to clear the book.

That will only hold true so long as you have the market demand to adjust your wages for inflation. Otherwise you will still owe $100, you will earn the same, however imported goods (especially fuel) will cost 200% as much. You will have fewer disposable dollars with which to chase your debt.

If we really screw it up the US economy will lack the strength to maintain its GDP; so you may find yourself out of a job rather then getting debt relief. Free traders will tell us that additional manufacturing will be attracted by the lower dollars; but, that presumes that you have an expandable manufacturing base. As we have seen with Argentina and Mexico, currency devaluation does not always result in a manufacturing boom. No one wants to invest into an unstable political mess.

[1rudeboy]

I think what you're saying is that some of my purchases will cost more. What I am saying is that my loan payment will cost less. No need to complicate the example past that point, because households cannot devalue currency, or print money. Why is everyone confusing macro with micro all of a sudden?

[XBob]

276 - "Free traders will tell us that additional manufacturing will be attracted by the lower dollars; but, that presumes that you have an expandable manufacturing base. As we have seen with Argentina and Mexico, currency devaluation does not always result in a manufacturing boom. No one wants to invest into an unstable political mess."

You are talking way above this poor boy's head. He doesn't have a clue, and doesn't know what has happened in the world. His teacher hasn't gotten past the first couple of chapters in his history book.