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Another way to wipe out a history of past trade imbalances would be to announce the retirement of the domestic currency, citing counterfeiting or hacking, hyper

Another way to wipe out a history of past trade imbalances would be to announce the retirement of the domestic currency, citing counterfeiting or hacking, hyperinflation, or whatever else that may sound plausible. You then allow only your own nationals to exchange old money for new money. In order to avoid losing all of the value of their old money, foreign holders would have to buy something from a domestic person, who could then exchange the currency. A smart exchanger would then either keep the new cash, or buy back their sold things at a lower price. In effect, it ends up being a one-time tax on domestic currency being held abroad. Any country that had been building up a reserve of your currency via trade deficits either has to settle up immediately by importing a giant bolus of your trade goods, or it gets screwed.

dpark 7y ago
That sounds like a great way to lose reserve currency status immediately.
- logfromblammo 7y ago
  If your currency is a reserve currency, this measure is unnecessary--you can just print more of it.
  - Fjolsvith 7y ago
    That has the unfortunate disadvantage of devaluing the currency your own citizens hold.
    - logfromblammo 7y ago
      Only the rich ones. The citizens who have their debts devalued, and whose assets are mostly in residential real estate, would see it as a fortunate advantage.
- Fjolsvith 7y ago
  What's the benefit of having reserve currency status? US States have right and left been legalizing precious metals for currency this last year, perhaps in preparation for a return to the gold standard and dumping federal reserve notes after an audit of the federal reserve...
  - dpark 7y ago
    > What's the benefit of having reserve currency status? You get to print absurd amounts of money without significant inflation because every other nation in the world hoards your currency because it’s the de facto standard for trade. US dollar stability owes a lot to the fact that everyone else holds a ton of dollars. > US States have right and left been legalizing precious metals for currency this last year... It’s never been illegal to trade precious metals for goods or services. Precious metals may not be legal tender but no one has been prevented from using them as currency. To the extent that some states may make gold or silver coins legal tender, it’s just pandering to conspiracy theories and paranoia. In the event that the dollar collapses, having gold as an alternative legal tender does nothing. Anyone saying otherwise is either lying or ignorant. If someone owes you $1300 dollars, having gold as an alternative legal tender doesn’t help you if the dollar collapses. The person owing you is absolutely not going to go find a Troy ounce of gold coins to pay you. They’re going to happily pay you the $1300 they owe you in devalued US dollars. And you’ll accept, because that’s what legal tender means.

dpark 7y ago

That sounds like a great way to lose reserve currency status immediately.

logfromblammo 7y ago
If your currency is a reserve currency, this measure is unnecessary--you can just print more of it.
- Fjolsvith 7y ago
  That has the unfortunate disadvantage of devaluing the currency your own citizens hold.
  - logfromblammo 7y ago
    Only the rich ones. The citizens who have their debts devalued, and whose assets are mostly in residential real estate, would see it as a fortunate advantage.
Fjolsvith 7y ago
What's the benefit of having reserve currency status? US States have right and left been legalizing precious metals for currency this last year, perhaps in preparation for a return to the gold standard and dumping federal reserve notes after an audit of the federal reserve...
- dpark 7y ago
  > What's the benefit of having reserve currency status? You get to print absurd amounts of money without significant inflation because every other nation in the world hoards your currency because it’s the de facto standard for trade. US dollar stability owes a lot to the fact that everyone else holds a ton of dollars. > US States have right and left been legalizing precious metals for currency this last year... It’s never been illegal to trade precious metals for goods or services. Precious metals may not be legal tender but no one has been prevented from using them as currency. To the extent that some states may make gold or silver coins legal tender, it’s just pandering to conspiracy theories and paranoia. In the event that the dollar collapses, having gold as an alternative legal tender does nothing. Anyone saying otherwise is either lying or ignorant. If someone owes you $1300 dollars, having gold as an alternative legal tender doesn’t help you if the dollar collapses. The person owing you is absolutely not going to go find a Troy ounce of gold coins to pay you. They’re going to happily pay you the $1300 they owe you in devalued US dollars. And you’ll accept, because that’s what legal tender means.