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That would be putting the cart before the horse. Foreigners sell you things in exchange for your currency, because they want to hold the currency. Once a curre
by neilwilson 1y ago
That would be putting the cart before the horse.
Foreigners sell you things in exchange for your currency, because they want to hold the currency. Once a currency is usable for payment in taxes, it can be analysed like any other commodity.
There are no 'reserve currencies'. Anybody holding a financial asset in a denomination outside its home physical zone area is a 'reserve'. They are operationally no different from hoarding diamonds or gold bars.
- spangry 1y agoThere’s one crucial difference - countries can’t print new diamonds or gold bars at will. Whenever the US prints more dollars, it transfers value from hoarders of US dollars to themselves - they’re levying a stealth tax via global oil price inflation. Other countries do not have this ability - if they print more of their own currency it just leads to domestic inflation. The US can effectively tax the world as long as they use their military power to ensure oil producing countries denominate their oil exports in US dollars. The reserve currency system is a stealth tribute system.