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Seigniorage is "profit made by a government by issuing currency" (according to Google). So the US government got all this money. And this led somehow to the US
by hollerith 3y ago
Seigniorage is "profit made by a government by issuing currency" (according to Google).
So the US government got all this money. And this led somehow to the US economy outperforming the rest of the developed world?
- cherryteastain 3y agoMoney is a representation of wealth. Underpinning that are real resources and labor, economists have realized this since Adam Smith. Debt is money creation. Deficit spending by the US govt is money creation; FED literally creates out of of thin air some money to buy T bills when it does QE. USD is the global reserve currency. Practically all trade deals are in USD, even when say a S Korean firm sells stuff to Indonesia. Only the US can print USD, all other countries must export goods or services to acquire the USD needed for their imports. Say an amount X USD represents all goods and services in the world. When the USG prints money, now X+dX dollars represent the same goods and services. USG spends the dX amount via salaries, purchase orders etc, and this amount reaches US companies and individuals. These individuals then purchase goods and services abroad. Essentially, without producing or selling anything in return, US gets to import dX dollars worth of goods and services. That's what seigniorage means in that context.
- deleted 3y ago[deleted]