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I thought currency and reserve assets were essentially the same because there is no basis (e.g. gold) for the currency. It's like your right hand printing curre
by brutusborn 4y ago
I thought currency and reserve assets were essentially the same because there is no basis (e.g. gold) for the currency. It's like your right hand printing currency to give to your left hand to distribute. The left isn't making anything, but it's irrelevant.
If the currency was gold backed, the right hand would be tied until the treasury deposited gold; now they can do it whenever the left hand looks empty.
- SevenNation 4y agoYou can pay for a vacation with US currency. You can't do that with reserve assets.
- brutusborn 4y agoBut don't the reserve assets just result in a bank using those assets as collateral for something else that can be used? I.e. you don't pay for a vacation with reserve assets directly, but your bank uses them to pad it's fed account so that your vacation fees are accepted by other banks? Without the reserve assets, other banks wouldn't do business with your account, and you couldn't pay for that vacation.
- legitster 4y ago> I thought currency and reserve assets were essentially the same because there is no basis (e.g. gold) for the currency. Reserve assets always have a separate source of value. Usually this means other currencies. And often it can even be gold reserves!
- brutusborn 4y agoWhat is the source of value for the reserve assets in current QE? And how would you find that out?