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The US dollar is backed by its military and government. In practice, while the US can reduce supply by buying dollars like you said, it can also increase demand

The US dollar is backed by its military and government. In practice, while the US can reduce supply by buying dollars like you said, it can also increase demand by incentivizing buying US currency (say by raising interest rates, or requiring certain transactions to be done in dollars). Economically the US is very well positioned - it has friendly neighbors, a robust legal system, a diversified industry and a lot of natural resources, so it would take quite a bit for hyperinflation to occur. Obviously anything is possible, though.

jeremyt 9y ago
The backing of the military is useless. You gonna force people to buy dollars at gunpoint? The backing of the government is unclear. We've seen 20% inflation before, and I see no reason we can't see it again.
- aphextron 9y ago
  >You gonna force people to buy dollars at gunpoint? Yes. This is the basis of 20th century American prosperity.
- ganeshkrishnan 9y ago
  Have you read more into the Iran deals and how they threatened to ditch USD? And South American countries? Look up Chiquita bananas on Wikipedia
- TheCoelacanth 9y ago
  > You gonna force people to buy dollars at gunpoint? It's only a slight exaggeration to describe taxes like that. There are huge amounts of assets held under the jurisdiction of the US government (probably somewhere north of $100 trillion[1]) and a huge number of people who live under the jurisdiction of the US government (>300 million). If the owners of those assets or the people living in the US don't pay their tax bills, the government can resort to seizing their property to cover the tax bill or jailing the person who didn't pay. If they don't cooperate with that action, the government can send people with guns to force them to comply. Effectively, everyone who lives in or owns property in the US is forced to acquire dollars to pay their tax bill. [1] https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...
- lucio 9y ago
  Also Saddam Hussein decision to sell oil only for euros. https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur...
  - priitmaxx 9y ago
    Yup very few people know this
- mindvirus 9y ago
  One example of this is the US collecting taxes in US dollars. Why not let me pay my taxes in Euros or gold (or bitcoin :D)? And there's the threat of violence backing this. If I refuse to pay my taxes in US dollars, I'll get some angry letters, I'll have my property seized, and then I'll get some police officers showing up at my door - and if I continue to resist, I'll either be arrested or killed. For refusing to pay my taxes in US dollars. Likewise, US dollars are "legal tender for all debts public and private". If someone (in the US) refuses to accept US dollars to consolidate a US debt, they will be arrested or killed (after several opportunities to course correct) and their property will be forcefully taken. And for a third example - consider someone trying to set up an unregistered company in the USA. If they get on the government's radar, what do you think their long term prospects are? Fortunately, our legal system and general social beliefs mean that it rarely if ever would come that far. But the threat of violence is real. And think - without that threat, however far removed, why would anyone pay their taxes or follow most laws?

jeremyt 9y ago

The backing of the military is useless. You gonna force people to buy dollars at gunpoint? The backing of the government is unclear. We've seen 20% inflation before, and I see no reason we can't see it again.

aphextron 9y ago
>You gonna force people to buy dollars at gunpoint? Yes. This is the basis of 20th century American prosperity.
ganeshkrishnan 9y ago
Have you read more into the Iran deals and how they threatened to ditch USD? And South American countries? Look up Chiquita bananas on Wikipedia
TheCoelacanth 9y ago
> You gonna force people to buy dollars at gunpoint? It's only a slight exaggeration to describe taxes like that. There are huge amounts of assets held under the jurisdiction of the US government (probably somewhere north of $100 trillion[1]) and a huge number of people who live under the jurisdiction of the US government (>300 million). If the owners of those assets or the people living in the US don't pay their tax bills, the government can resort to seizing their property to cover the tax bill or jailing the person who didn't pay. If they don't cooperate with that action, the government can send people with guns to force them to comply. Effectively, everyone who lives in or owns property in the US is forced to acquire dollars to pay their tax bill. [1] https://en.wikipedia.org/wiki/Financial_position_of_the_United_States https://en.wikipedia.org/wiki/Financial_position_of_the_Unit...
lucio 9y ago
Also Saddam Hussein decision to sell oil only for euros. https://www.theguardian.com/business/2003/feb/16/iraq.theeuro https://www.theguardian.com/business/2003/feb/16/iraq.theeur...
- priitmaxx 9y ago
  Yup very few people know this
mindvirus 9y ago
One example of this is the US collecting taxes in US dollars. Why not let me pay my taxes in Euros or gold (or bitcoin :D)? And there's the threat of violence backing this. If I refuse to pay my taxes in US dollars, I'll get some angry letters, I'll have my property seized, and then I'll get some police officers showing up at my door - and if I continue to resist, I'll either be arrested or killed. For refusing to pay my taxes in US dollars. Likewise, US dollars are "legal tender for all debts public and private". If someone (in the US) refuses to accept US dollars to consolidate a US debt, they will be arrested or killed (after several opportunities to course correct) and their property will be forcefully taken. And for a third example - consider someone trying to set up an unregistered company in the USA. If they get on the government's radar, what do you think their long term prospects are? Fortunately, our legal system and general social beliefs mean that it rarely if ever would come that far. But the threat of violence is real. And think - without that threat, however far removed, why would anyone pay their taxes or follow most laws?