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The US military is absolutely required to maintain the value of the USD. If not for the threat of violence, any nation state in the world could print as much US
by stickfigure 6y ago
The US military is absolutely required to maintain the value of the USD. If not for the threat of violence, any nation state in the world could print as much USD as they cared.
This cost must be taken into account.
- jcranmer 6y agoThe problem with the simplistic analysis of "fiat currency maintains its value by the threat of military force" is that actual evidence rather undercuts the theory. The Somali shilling broadly maintained its value for 15 years despite the complete collapse of any effective government, which is precisely the opposite of what Economics 101 would suggest.
- stickfigure 6y agoEven if that was true, do you think it would scale? Let's say that in a sudden fit of consensus, tomorrow, everyone worldwide decided to replace the USD with Somali shillings. How long do you think it would take North Korea to start mass-printing shillings? At any rate, the narrative that the Somali shilling maintained its value is directly contradicted by Wikipedia: https://en.wikipedia.org/wiki/Somali_shilling#Modern_history https://en.wikipedia.org/wiki/Somali_shilling#Modern_history It starts with "Following the breakdown in central authority that accompanied the civil war, which began in the early 1990s, the value of the Somali shilling was disrupted" and gets worse from there. The currency became worthless and they dollarized. The only reason the shilling is - very recently! - recovering is because they once again have a central government and a central bank.