4 ms·

Why is it different for the US? Genuinely curious.

• nine_zeros 4y ago
  Being the reserve currency, every country wants dollars. Every other country needs dollars to do trade, even among each other. With a tax cut, US consumers have more money which they spend on imported goods. This supplies dollars to the rest of the world, increasing the value of 196 currencies marginally. You can think of USD being in demand from 8 billion people. If US dollar wasn't a reserve currency, a tax cut would have increased supply of dollars with consumers but demand would only be from the 330 million people in America. High supply of money, no change in supply of goods would then cause inflation.
  • landemva 4y ago
    > With a tax cut, US consumers have more money which they spend on imported goods. So the dollars go overseas buying imported goods and then partially those overseas dollars buy USA treasury debt. This puts the price inflation, if any, overseas and then "sterilized" into Treasuries. This is why USA consumer prices and gold didn't go to the moon after 2008 bank bailouts.