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> If push comes to shove and we (the US) devalue our currency [..] Against what, and by what means? (Perhaps naively) I'd always assumed the markets decide th
by logifail 5y ago
> If push comes to shove and we (the US) devalue our currency [..]
Against what, and by what means?
(Perhaps naively) I'd always assumed the markets decide the exchange rates of (most) Western currencies against each other.
Obviously with a dollop of central bank intervention here and there(!)
- wbsss4412 5y agoExchange rates are indeed set by markets, but then all a central bank has to do to devalue its currency is to sell its own currency for another (or buy assets denominated in another currency, which is essentially the same thing with extra steps)
- Turing_Machine 5y agoAt the crudest level, what do you suppose would happen if the U.S. Treasury/Federal Reserve suddenly decide that every dollar-denominated account of $n got a "stimulus payment" of $2n?
- logifail 5y agoYou mean a bit like this https://fred.stlouisfed.org/graph/?g=KT86 https://fred.stlouisfed.org/graph/?g=KT86 but overnight, rather than over several years?
- wbsss4412 5y agoThat’s a very indirect way to devalue a currency for foreign exchange purposes. Sure, you’d be massively increasing that supply, but it’s doesn’t necessarily follow that said supply would flow directly into forex markets.