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This works fine but you can only do it if there are large foreign reserves of your currency. Now, since foreign reserves of USD are massive, we can print a lot
by kaibee 8y ago
This works fine but you can only do it if there are large foreign reserves of your currency. Now, since foreign reserves of USD are massive, we can print a lot of money (relatively) before it becomes a problem, but it isn't like this exempts you from market effects. The reason foreign reserves of USD are so high in the first place is that we usually do this very little.
- TheBeardKing 8y agoThe US also has to keep the USD a just-safer investment than other world currencies, held by other governments with their own issues. As long as USD is the safest investment, the US will never default. Don't outswim the shark, just the slowest swimmer and all that.