>If you're holding a currency in reserve, you're explicitly not using it to purchase goods and services. Right. The point is you need confidence that it will b

>If you're holding a currency in reserve, you're explicitly not using it to purchase goods and services. Right. The point is you need confidence that it will be possible to use it for that in the future for a large portion of your (or somebody else's) basic needs. The US gained reserve currency status when it became the world's factory in the aftermath of WW2 while the rest of the world's factories had been destroyed. >Is it coincidental that the US started running a trade deficit in the decade it abandoned Bretton Woods? After it became the world's reserve currency? No, it's not coincidental. As I said before it's a perk of being a reserve currency. How could they resist? Well, they couldn't. >If your currency becomes a reserve currency it tends to appreciate in value, which makes your own products more expensive (especially as exports). You can call being able to import things cheaply a benefit, but it's a detriment to those in the reserve currency country who make their living as producers. I never said that being the world's reserve currency was good for America. It went from the world's industrial powerhouse (a title now claimed by China) to a having its entire industrial ecosystem hollowed out for profit. It did take a long time though. That could be the case for China also. This is the kind of shift that can take up to 2-3 generations though, whereas a run on a currency takes a day.