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> 26 countries borrow for less than the US This is so misleading. The U.S. is intentionally raising the rate at which it borrows to slow down its own economy.

by rcme 4y ago

> 26 countries borrow for less than the US This is so misleading. The U.S. is intentionally raising the rate at which it borrows to slow down its own economy. Also, the rate at which you borrow is only half the equation. You also need to consider the amount being borrowed.

gumby 4y ago
But what has the amount being borrowed to do with being a reserve currency? The amount leant for foreign exchange reserves (by other countries) is a small percentage of the total, as you can easily look up. Most government debt in the US is held by us citizens and entities (as is true for thenother large economies) You seem to be trying hard to make a point where neither data nor theory support it
- user_named 4y ago
  You're trying to claim there's barely any benefit to controlling the world's reserve currency - you are the one with no theory or data to back up four claim. The rest of the world would disagree with you.
- rcme 4y ago
  > But what has the amount being borrowed to do with being a reserve currency? The amount leant for foreign exchange reserves (by other countries) is a small percentage of the total Where did I mention foreign exchange reserves? I just said the US had an easier time borrowing money. That includes from other countries, institutions, and individuals. Think about it like this: The US can say: “Hey world, I’m borrowing money at X%”. Regardless of what X is, the US will be able to borrow large amounts of money. Some of the borrowers will be foreign governments, some will private citizens, some will be institutional investors. It doesn’t really matter. There will be huge appetite for the debt regardless of yield. Now, Portugal is free to say “Hey world, I’m borrowing money at X/2%”. That’s totally within Portugal’s rights. But they’re going to have a very difficult time borrowing any substantial amount of money. Maybe they’re ok with that. Maybe they don’t need to borrow much. But if they did want to borrow a lot they’d need to pay a premium on top of what the US was paying to borrow. Now you’ll probably respond with something like “The BoE and ECB rates are lower than the Fed’s” and that’s true. And the reason is because there is a complicated relationship between demand for dollars and bonds, the amount the US wants to borrow, domestic monetary policy, and the opportunity cost between holding other currencies other than the US dollar. The point is that being the reserve currency allows the US to borrow more for cheaper than it otherwise would be able to. That doesn’t mean the US has the highest debt or the absolute lowest interest rate. It just means, had the US not been the reserve currency, they would have paid more for borrowing the amount of money they borrowed.

by rcme 4y ago

gumby 4y ago

But what has the amount being borrowed to do with being a reserve currency? The amount leant for foreign exchange reserves (by other countries) is a small percentage of the total, as you can easily look up. Most government debt in the US is held by us citizens and entities (as is true for thenother large economies) You seem to be trying hard to make a point where neither data nor theory support it

user_named 4y ago
You're trying to claim there's barely any benefit to controlling the world's reserve currency - you are the one with no theory or data to back up four claim. The rest of the world would disagree with you.
rcme 4y ago
> But what has the amount being borrowed to do with being a reserve currency? The amount leant for foreign exchange reserves (by other countries) is a small percentage of the total Where did I mention foreign exchange reserves? I just said the US had an easier time borrowing money. That includes from other countries, institutions, and individuals. Think about it like this: The US can say: “Hey world, I’m borrowing money at X%”. Regardless of what X is, the US will be able to borrow large amounts of money. Some of the borrowers will be foreign governments, some will private citizens, some will be institutional investors. It doesn’t really matter. There will be huge appetite for the debt regardless of yield. Now, Portugal is free to say “Hey world, I’m borrowing money at X/2%”. That’s totally within Portugal’s rights. But they’re going to have a very difficult time borrowing any substantial amount of money. Maybe they’re ok with that. Maybe they don’t need to borrow much. But if they did want to borrow a lot they’d need to pay a premium on top of what the US was paying to borrow. Now you’ll probably respond with something like “The BoE and ECB rates are lower than the Fed’s” and that’s true. And the reason is because there is a complicated relationship between demand for dollars and bonds, the amount the US wants to borrow, domestic monetary policy, and the opportunity cost between holding other currencies other than the US dollar. The point is that being the reserve currency allows the US to borrow more for cheaper than it otherwise would be able to. That doesn’t mean the US has the highest debt or the absolute lowest interest rate. It just means, had the US not been the reserve currency, they would have paid more for borrowing the amount of money they borrowed.