" If the economy shrinks people need to pay less in Taxes which lowers the demand for dollars." If the demand for dollars is due to taxes, more taxes create mo

" If the economy shrinks people need to pay less in Taxes which lowers the demand for dollars." If the demand for dollars is due to taxes, more taxes create more demand and it's not decided by the size of the economy but by the level of demanded taxes. " Similarly, if the Government spends more than it takes in by "Printing Money" that also devalues its currency." I suppose you mean, devalues its currency respect another currencies. This is not always the case, but if it is, that would imply that imports are expensive and export cheaper. At the end of the day, what counts is the real economy. If in order to reduce debt you are downsizing the real economy you are not doing a good business. I don't understand your last paragraph.