"There is no infinite QE" There is. The central bank can offset all the excess saving in the economy from now until doomsday. As Japan has shown for decades.

"There is no infinite QE" There is. The central bank can offset all the excess saving in the economy from now until doomsday. As Japan has shown for decades. Once you close the mental model you'll see why. What does "confidence in the currency" mean in reality? It means that fewer people want to save in that denomination. When they don't save they have to spend (since that is the only alternative in aggregate), when they spend that generates asset inflation, production and, most importantly, more and more tax points - which reduces the need for bonds and "QE" in the first place. Always remember that an FX transaction is nothing more than a set of two contracts each of which transfer a currency to the other party no less than two days hence. Which means eventually somebody has to have the actual liquidity to settle the net flow. There is no liquidity provider of last resort.