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It is the exorbitant privilege. It is a bit hard to find good discussions of the mechanism because it gets political very quickly. But in essence if the US prin
by throwaway4good 2y ago
It is the exorbitant privilege. It is a bit hard to find good discussions of the mechanism because it gets political very quickly. But in essence if the US prints the whole world absorbs it, if Japan prints it stays in Japan.
- ArtTimeInvestor 2y agoWhat you say is that there is more demand for the Dollar. That does not change the fact that the price halves when the supply doubles. Price = demand/supply.
- CorrectHorseBat 2y agoDemand can be a function of supply, so no it's not that simple.
- kurthr 2y agoYou somehow think that the demand/supply curve is linear. Why? It would be quite odd. Certainly Japan has generated far more currency and debt over the last 35 years while inflation stayed low (and the relative value of Yen stayed high). I don't see any explanation for that here any more than the yearly gyrations of other currencies crypto or fiat.
- logicchains 2y agoEconomics 101: the supply curve is not a linear relationship. https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand
- throwaway4good 2y agoWhen a central bank expands the money supply (by changing their interest rate or doing QE) it doesn't spread linearly in the economy. There is a much more complex pattern. And the dynamics of the dominant currency which has all other curencies subordinate to it are completely different from that of a mostly local currency. But as I wrote. This is a controversial subject. And there are economists out there who will tell you that the special status of the US dollar makes no difference at all and this de Gaulle guy just was upset about losing some colonies.