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Who would buy bonds and with what if in this scenario we all didn’t believe in the green back?

• OscarCunningham 5y ago
  I'm imagining that people still have the dollars, they just believe they're worhtless. So people are happy to trade them away to anyone offering something valuable in exchange for them. The question I expected you to ask is why people wanted the bonds, since all they're backed by is future dollars. The circularity is resolved by the fact that people know that there will be some demand from the government for dollars, since the government has outstanding dollar-denominated debt.
  • OGWhales 5y ago
    > there will be some demand from the government for dollars I think an important cause of demand you're missing is that people still need to pay taxes in dollars.
    • OscarCunningham 5y ago
      If people earned bitcoin and paid taxes in bitcoin the government would still need to exchange those bitcoins for dollars in order to pay its debts.
      • OGWhales 5y ago
        My point is that taxes are a key factor in creating demand for dollars. > the government would still need to exchange those bitcoins for dollars in order to pay its debts That is not true. The government does not collect taxes to pay its debt, as it can simply spend its own currency which it creates. Taxes are relevant to spending in that it keeps dollars valuable.
        • OscarCunningham 5y ago
          > The government does not collect taxes to pay its debt, as it can simply spend its own currency which it creates. Not if it wants to hit an inflation target.