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If I am China I lend you money I would like get paid back in dollars because I can already print as many Yuan as a I want. Why should I lend to you in a curren

by gscott 1y ago

If I am China I lend you money I would like get paid back in dollars because I can already print as many Yuan as a I want. Why should I lend to you in a currency I can turn the printing press on for. So it feels like the Dollar will be around for awhile as long as it is accepted, convertible, and the Government tries to slow down the printing press themselves.

alfiedotwtf 1y ago
You know… there are other alternatives to the Yuan, but your response makes it sound like USD is the only choice
- gscott 1y ago
  The Euro may go for it https://www.bruegel.org/first-glance/more-eu-debt-issuance-would-be-best-response-trumps-tariffs https://www.bruegel.org/first-glance/more-eu-debt-issuance-w...
  - mcv 1y ago
    The Euro already is the second reserve currency of the world, and because it's already an international currency, no single country can just decide to print more. It's a far more attractive choice than the Yuan or arguably the Dollar.
    - alfiedotwtf 1y ago
      It will be interesting if countries eventually move to crypto stable coins that aren't tied to individual powers
mitthrowaway2 1y ago
Why would that be any better or worse than being paid back in paper that your counterpart can print with their own printing press?
- gscott 1y ago
  If you pay me back say in Pesos and I can print Pesos then did you really give me anything at all because I have more all for free. If I own a teddy bear factory and I give you 10 teddy bears and you give me back 11 teddy bears I would prefer 11 dolphins instead as they are something that I don't have and can't make.
  - mcv 1y ago
    To get those pesos to pay you back, he needs to get those pesos, which means selling you something and then giving back the money you used to pay for it, which means the real interest you got was those goods. That's real value that diluting your own currency doesn't get you.

by gscott 1y ago

alfiedotwtf 1y ago

You know… there are other alternatives to the Yuan, but your response makes it sound like USD is the only choice

gscott 1y ago
The Euro may go for it https://www.bruegel.org/first-glance/more-eu-debt-issuance-would-be-best-response-trumps-tariffs https://www.bruegel.org/first-glance/more-eu-debt-issuance-w...
- mcv 1y ago
  The Euro already is the second reserve currency of the world, and because it's already an international currency, no single country can just decide to print more. It's a far more attractive choice than the Yuan or arguably the Dollar.
  - alfiedotwtf 1y ago
    It will be interesting if countries eventually move to crypto stable coins that aren't tied to individual powers

mitthrowaway2 1y ago

Why would that be any better or worse than being paid back in paper that your counterpart can print with their own printing press?

gscott 1y ago
If you pay me back say in Pesos and I can print Pesos then did you really give me anything at all because I have more all for free. If I own a teddy bear factory and I give you 10 teddy bears and you give me back 11 teddy bears I would prefer 11 dolphins instead as they are something that I don't have and can't make.
- mcv 1y ago
  To get those pesos to pay you back, he needs to get those pesos, which means selling you something and then giving back the money you used to pay for it, which means the real interest you got was those goods. That's real value that diluting your own currency doesn't get you.