We need more thinking along the lines of #2.  Would exchange rates be less incidental if all countries abandoned debt created cash?

Hi Jason.  Long time, eh.  I have long been a proponent of the concept that GDP need not have positive growth in national or regional economies with an ageing population (i.e. Japan, Florida, West Vancouver).  What is more important for a jurisdiction is to maintain positive cash flow; and stay away from deficit budgeting.  Canada didn't have the mini recession that u had in y2k/2001, but your businesses that went thru that one and the previous two learned that getting lean and mean and having postive P&L's was more important than higher and higher revenues.  It's the bottom line that counts... not the top one.

In North America, we have two decades 'til we reach the aged population of japan.  Italy and Germany are much closer.  For the most part, a larger GDP affords the wages for growing labour force.  By 2050, most nations will see that growth naturally extinquished.  And the Main stream media (msm), politicians, pundits and especially economists must learn that Recession is NOT A DIRTY WORD.

On your second question, first past the post (fptp) electoral system in north america and the uk is the scourge of good long term planning and economic strategies.  Legislators at all levels from municipal to Fed'l are always cognizant of the next Election and ramifications of their voting pattern.  They face tough decisions on sustainable economies, social programs, health care, safety nets, pensions and the environment.  We knew ten years ago that we had to go back to nuclear but it was not sexy to say that before ballot day.

OTOH, concensus gov't often gives bad legislation too due to lack or knowledge resources for good planning.

Deficit Borrowing in the 70's & 80's was for the most part disgusting but did serve the purpose of implementing a more social conscious agenda that was permeating the West and funded infrastructure for the Baby Boom ... schools, colleges, universities, subdivisions, plazas, urban growth in general.  But you can't do it forever and few countries are following our (keynesian) lead in Canada to sock money away in the good times.  We have had 8 successive annual surplus budgets and have paid down our nat'l debt by 12%.  Part of our good fortune is that we are the main exporter of gas and oil to the USA and we luv it when u want to pay $12 for nat'l gas or $75 for oil when our cost of production has virtually not moved in 24 months.

There are norms for federal, state/prov & municipal jurisdictions on the acceptable level of debt to GDP and deficit to GDP.  Staying within the norms on the short and medium term will allow their govt's freedom and flexibility.  Long term continuation will mean currency deterioration, deferred infrastructure mainenance and/or an approaching wall of taxation or privatization of their assets.

Inflation used to save individuals and jurisdictions from bad planning.  It was the grand forgiver.  But that is a concept of the past.  Central banks will not let us go down that path anymore.  Those who try pay the consequences badly (e.g. Argentina).

There are no empirical examples of g-20 nations that abide by conventional norms of implementing fiscal and monetary policy that face a debt wall.  No collapses.  Not one.  If a g-20 nation fell, it was due to other political circumstances ... not economic.

Some will point to Argentina.  But they skoffed and long term debt agreements and went short term while increasing deficits, taxation laxness and poor tax collection.  And the holders of their notes refused to renew for further terms.  Expecially when Argentian ignored IMF guidance.  They paid the price for their cockiness and a try at something outside the norms...