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They're buying those securities with printed money. It won't bankrupt the government, it will tank the dollar and everyone who has dollars, gets paid in dollars
by padobson 5y ago
They're buying those securities with printed money. It won't bankrupt the government, it will tank the dollar and everyone who has dollars, gets paid in dollars or loans dollars. Those borrowing dollars to buy assets and offload liabilities will be fine.
The first people getting those borrowed dollars (government contractors, banks selling treasuries and MBS, old people on social security) will be okay.
- maxwell 5y agoOn the flip side, it will benefit those who don't hodl $USD, those who borrowed dollars, and exporters of U.S. made goods. Big opportunities in manufacturing and agriculture, risks in finance and communications. https://www.lynalden.com/fraying-petrodollar-system https://www.lynalden.com/fraying-petrodollar-system
- all2 5y ago> It won't bankrupt the government, it will tank the dollar and everyone who has dollars, gets paid in dollars or loans dollars. Can you expand on this? How does that work?
- Qub3d 5y agoSince the dollar is an entirely Fiat currency, its supply is dictated purely at the whim of the U.S. Government. This means that they can turn on the presses (or these days, make some keystrokes) and instantly have as much money as they want. Because of this, if there are outstanding debts that are denominated in USD, the government will always be able to have that money on hand, or create it. The problem is that this puts more dollars out in the world. And if there are more dollars in circulation, everyone (on average) has a little bit more they can "bid" on consumer goods. Because of the law of supply and demand, things inflate in price.