Dave, and Chris, jct et al.
First thank you for the very thoughtful discussion about SDRs. Dave, your detailed post especially.
I confess it is even more abstract than fiat /fractional reserve currency thus harder to understand. Makes one wonder- the harder it is for common folk to understand, the easier it is to control the puppet strings…?
But Dave, you mentioned two key phrases, very offhandedly, but are the core of the current problem.
"when things normalized"
"after the crisis abates"
That is the core of our current predicament. Predicament, to paraphrase Chris, meaning no good solution, meaning we fell off the cliff, now how do we land?
All modern Keynesian economics have a core principle that government infusions of cash/ credit are 'temporary' measures, to restore the economy to some immutable growth curve, that is a law of nature, that somehow we stumbled off of. None of the current Keynesian world views even entertain the idea that we are/ were on an unsustainable curve that is a figment of an economist's imagination and hypothetical mathematical model that only lives inside a hard drive platter (Bernanke) and does not live in the 'real world'.
If I understand a core principle of the Crash Course, all of the above is false. We cannot live on an exponential curve forever. Reality means we fall off that curve, at some point. Due to physical limitations- the amount of oil that we can extract, the heat capacity of Earth, the fresh water available for growing food on Earth. No amount of manipulation by any small or large group of powerful people can change that reality. It is simply truth. We must deal with it. There are a number of choices for dealing with predicaments. Some better than others- i.e. slowly and painfully (i.e. "suffer" with a more constrained consumption) transition off of population growth and fossil fuels versus killing half the world's population next year. These are the hard discussions that I perceive Chris is promoting, and I agree we should have. A corollary to this view: The closer we get to the ground, the smaller our range of choices are.
Which means "things do not normalize" and "the crisis does not abate".
If this is true, all the Keynesian, and XDRian scenarios are based on incorrect assumptions.
If a hypothetical single man who is a house painter, with no living family (meaning no one else for the bank to sue) owes a bank $300,000, then falls off his ladder and becomes a permanent quadrapalegic, the bank aint' getting that money. The crisis will not abate. Things will not normalize.
Greece is that house painter. It has broken its national neck. It physically cannot pay. Will they discover a mountain of gold or diamonds under the Parthenon to pay off their debt? I don't think so. Its debt will not normalize. Adults and mathematicians know this. The ECB appears not to know this.
Are not all of the countries of the world Greece? We are all the house painters with just different types of permanent injuries. We have massive debts that are far larger than our modest incomes, and with major physical limitations.