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When other countries export to the US, they send real goods and get USD denomiated reserves in accounts at the fed in return. They swap some of those USD denomi
by dools 2y ago
When other countries export to the US, they send real goods and get USD denomiated reserves in accounts at the fed in return. They swap some of those USD denominated reserves for USD denominated bonds, because the US federal government has decided that they want to target specific interest rate and so they do so using domestic market operations.
At no point is the US federal government taking on debt denominated in a currency it does not issue (at least not in any significant amounts).
- pessimizer 2y agoI don't remember saying that it did. Our need for foreign currency isn't going to disappear. The question was about whether we should pay interest on US bonds. The interest on government bonds is a reason for them to be held.