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I read somewhere that because of the USD's status as an international reserve currency, a safe currency in times of crisis, and one in which a huge amount of de

I read somewhere that because of the USD's status as an international reserve currency, a safe currency in times of crisis, and one in which a huge amount of debt is denominated, there's close to $20 trillion worth of demand for USD, so the Fed can afford to print up to that much without any expected inflation. Other countries, on the other hand, have much less room to print money without causing inflation.

H8crilA 7y ago
Again, don't do magical thinking. Inflation is about things like tomatoes. The only way to make their prices go up is to reduce the amount of tomatoes produced per year, or increase people's willingness to eat them.
- gjulianm 7y ago
  Isn't the price affected also by increasing wages, transportation costs, etc too?
- arethuza 7y ago
  "The only way to make their prices go up is to reduce the amount of tomatoes produced per year, or increase people's willingness to eat them" Or influence other people into thinking that either of those are going to happen?
- crispyporkbites 7y ago
  That assumes that everyone who wants to buy tomatoes is able to buy them at current prices, and that everyone who is buying tomatoes now would no longer buy them if the price went up. If there are more dollars floating around in the economy, more people may be able to afford to buy tomatoes and more people become price insenstive (e.g. software engineers in SV do not care if tomaatoes are $2/kilo or $4/kilo, they'll still buy). As a seller you'll raise prices and see no drop in demand, ergo prices go up.
- fbonetti 7y ago
  You’re only looking at one side of the equation. Assuming demand stays constant, if you reduce the number of tomatoes, their price will go up. Likewise if you increase the number of dollars, the price of tomatoes will also go up, because each individual dollar isn’t worth as much.
  - TheSpiceIsLife 7y ago
    That only matters if people are prepared to pay more for tomatoes, which I don’t think they are as evidence by inner-city real estate prices going up way more than the price of tomatoes in inner-city groceries. On the whole people are drastically more interested in paying more for real estate / assets / buying or starting a business than they are in giving dollars to tomatoes producers. Tomato producers will take whatever they can get at market, because the produce is perishable, whereas real estate vendors can (usually) afford wait to for a greater-fool with deeper-pockets.
    - fbonetti 7y ago
      You're missing the point of the example. Substitute tomatoes with something with a long shelf life, like Spam. It doesn't matter. The point is that the people utilize leverage (loans) in order to fund investments that will yield a return greater than the interest rate paid on the loan. People don't use leverage to buy milk, cigarettes, and gasoline, which are the types of goods tracked in the Consumer Price Index (CPI). They use leverage to buy assets. So when people say that inflation has been low despite the unprecedented amount of money printed over the last 10 years, they're only looking consumer goods and not assets.
      - TheSpiceIsLife 7y ago
        Oh, sorry, I think I read for previous comment in the wrong context.
redis_mlc 7y ago
> the USD's status as an international reserve currency There are several reasons for that. There are very few industrial powers, mainly the US, Germany, China and Japan. The Economist calls the rest of the European countries "sick men" with a population dependent on welfare. Most had to lie their way (with help from Goldman Sachs) into the EU since they didn't meet the financial milestones for admittance. Of the large economies, China is known for both currency manipulation and political issues. The US is the only superpower left. It's easy to see - the US has the only operational heavy aircraft carriers. That gives the USD legitimacy that the Euro doesn't have - there is no army behind the Euro. The advantage of being the international reserve currency is that the US gets around 1% more economic growth than others, but we pay for the military might to defend the dollar. So do you want greenbacks or lira? :)
- bsanr2 7y ago
  Much of the US is dependent on welfare paid for by a few industrial/financial centers. As a whole, we are also known of late for currency manipulation and political issues. Ask anyone about the effectiveness of our military should there be a funding crunch, with how much is spent maintaining overpriced, underperforming equipment. On the primacy of the dollar: we walk by faith, not by sight.
  - redis_mlc 7y ago
    I normally don't reply to trolls, but ... > Much of the US is dependent on welfare paid for by a few industrial/financial centers. That's internal. > As a whole, we are also known of late for currency manipulation and political issues. Yet we're the de facto global currency. > Ask anyone about the effectiveness of our military Works great. If you want to learn more, just enter your map coordinates. > how much is spent maintaining overpriced, underperforming equipment. US doctrine is that money is no object. Ask UK about the alternative. > On the primacy of the dollar: we walk by faith, not by sight. Plus a real military, funded by a real economy.
    - bsanr2 7y ago
      Contradiction != trolling. If you deign to respond please do it respectfully. >That's internal. The circumstances of EU members with respect to the EU is substantially similar to the circumstances of states to the US federal government. >Yet we're the de facto global currency. This is begging the question. >Works great. Hm. >US doctrine is that money is no object. Ask UK about the alternative. I'd rather ask the Axis powers about the topic in question. >Plus a real military, funded by a real economy. Again, hm. I think you're proving my point. Real things can weather a period of stoppage. Castles built on data and debt disappear when the lights go out. Again, ask someone in-the-know what happens if funding or supply lines dry up, even temporarily.

H8crilA 7y ago

Again, don't do magical thinking. Inflation is about things like tomatoes. The only way to make their prices go up is to reduce the amount of tomatoes produced per year, or increase people's willingness to eat them.

gjulianm 7y ago
Isn't the price affected also by increasing wages, transportation costs, etc too?
arethuza 7y ago
"The only way to make their prices go up is to reduce the amount of tomatoes produced per year, or increase people's willingness to eat them" Or influence other people into thinking that either of those are going to happen?
crispyporkbites 7y ago
That assumes that everyone who wants to buy tomatoes is able to buy them at current prices, and that everyone who is buying tomatoes now would no longer buy them if the price went up. If there are more dollars floating around in the economy, more people may be able to afford to buy tomatoes and more people become price insenstive (e.g. software engineers in SV do not care if tomaatoes are $2/kilo or $4/kilo, they'll still buy). As a seller you'll raise prices and see no drop in demand, ergo prices go up.
fbonetti 7y ago
You’re only looking at one side of the equation. Assuming demand stays constant, if you reduce the number of tomatoes, their price will go up. Likewise if you increase the number of dollars, the price of tomatoes will also go up, because each individual dollar isn’t worth as much.
- TheSpiceIsLife 7y ago
  That only matters if people are prepared to pay more for tomatoes, which I don’t think they are as evidence by inner-city real estate prices going up way more than the price of tomatoes in inner-city groceries. On the whole people are drastically more interested in paying more for real estate / assets / buying or starting a business than they are in giving dollars to tomatoes producers. Tomato producers will take whatever they can get at market, because the produce is perishable, whereas real estate vendors can (usually) afford wait to for a greater-fool with deeper-pockets.
  - fbonetti 7y ago
    You're missing the point of the example. Substitute tomatoes with something with a long shelf life, like Spam. It doesn't matter. The point is that the people utilize leverage (loans) in order to fund investments that will yield a return greater than the interest rate paid on the loan. People don't use leverage to buy milk, cigarettes, and gasoline, which are the types of goods tracked in the Consumer Price Index (CPI). They use leverage to buy assets. So when people say that inflation has been low despite the unprecedented amount of money printed over the last 10 years, they're only looking consumer goods and not assets.
    - TheSpiceIsLife 7y ago
      Oh, sorry, I think I read for previous comment in the wrong context.

redis_mlc 7y ago

> the USD's status as an international reserve currency There are several reasons for that. There are very few industrial powers, mainly the US, Germany, China and Japan. The Economist calls the rest of the European countries "sick men" with a population dependent on welfare. Most had to lie their way (with help from Goldman Sachs) into the EU since they didn't meet the financial milestones for admittance. Of the large economies, China is known for both currency manipulation and political issues. The US is the only superpower left. It's easy to see - the US has the only operational heavy aircraft carriers. That gives the USD legitimacy that the Euro doesn't have - there is no army behind the Euro. The advantage of being the international reserve currency is that the US gets around 1% more economic growth than others, but we pay for the military might to defend the dollar. So do you want greenbacks or lira? :)

bsanr2 7y ago
Much of the US is dependent on welfare paid for by a few industrial/financial centers. As a whole, we are also known of late for currency manipulation and political issues. Ask anyone about the effectiveness of our military should there be a funding crunch, with how much is spent maintaining overpriced, underperforming equipment. On the primacy of the dollar: we walk by faith, not by sight.
- redis_mlc 7y ago
  I normally don't reply to trolls, but ... > Much of the US is dependent on welfare paid for by a few industrial/financial centers. That's internal. > As a whole, we are also known of late for currency manipulation and political issues. Yet we're the de facto global currency. > Ask anyone about the effectiveness of our military Works great. If you want to learn more, just enter your map coordinates. > how much is spent maintaining overpriced, underperforming equipment. US doctrine is that money is no object. Ask UK about the alternative. > On the primacy of the dollar: we walk by faith, not by sight. Plus a real military, funded by a real economy.
  - bsanr2 7y ago
    Contradiction != trolling. If you deign to respond please do it respectfully. >That's internal. The circumstances of EU members with respect to the EU is substantially similar to the circumstances of states to the US federal government. >Yet we're the de facto global currency. This is begging the question. >Works great. Hm. >US doctrine is that money is no object. Ask UK about the alternative. I'd rather ask the Axis powers about the topic in question. >Plus a real military, funded by a real economy. Again, hm. I think you're proving my point. Real things can weather a period of stoppage. Castles built on data and debt disappear when the lights go out. Again, ask someone in-the-know what happens if funding or supply lines dry up, even temporarily.