3 ms·

I don't live in the US but I'm definitely feeling the negative effects of the fiat system really harshly. From my perspective, I believe that the effects would

I don't live in the US but I'm definitely feeling the negative effects of the fiat system really harshly. From my perspective, I believe that the effects would be similar regardless of which country had the superpower status. Interlinked fiat currencies are just a perfect mechanism to allow militarily or economically dominant countries to manipulate the global economy in their favor. As a superpower, you can leverage corruption in foreign countries to load them up with debt denominated in your currency to allow you to export your inflation to them... You can also leverage foreign corruption to sign large, unjust trade deals or oversized military contracts which will prop up your currency. Still, at the root, I blame the system itself, not specific participants.

pjc50 8mo ago
None of those problems requires money printing.
- jongjong 8mo ago
  I'm keen to read the book suggested by the previous commenter and have my view challenged but my current understanding is that money printing plays a major role due to incentives. People are far more willing to spend large amounts of other people's money on frivolous things than they would if it was their own money. Also, the ability for a government to create large amounts of money on demand allows them to spend on destructive activities which can create opportunities for certain connected people in the private sector. Price discovery in the markets cannot work if one party has a theoretically unlimited amount of currency. It just devalues the currency. If the government knew that the budget was limited and they only had x amount of money to spend that year as an absolute maximum, they wouldn't be sending it to foreign countries as foreign aid.
  - kranke155 8mo ago
    You’re right that money printing is a problem, the point Arrighi has in his book and writing is this has happened 4 other times and seems basically inevitable. Other powers have had monetary empires and they all go through this.
kranke155 8mo ago
Yes that is literally what the fiat money system is about. By using fiat, dollar as a reserve currency and the petrodollar, the US gets to export inflation and devalue everyone's currency against their own (I think). The best explanation I've seen of this are by Varoufakis, but there are others.

pjc50 8mo ago

None of those problems requires money printing.

jongjong 8mo ago
I'm keen to read the book suggested by the previous commenter and have my view challenged but my current understanding is that money printing plays a major role due to incentives. People are far more willing to spend large amounts of other people's money on frivolous things than they would if it was their own money. Also, the ability for a government to create large amounts of money on demand allows them to spend on destructive activities which can create opportunities for certain connected people in the private sector. Price discovery in the markets cannot work if one party has a theoretically unlimited amount of currency. It just devalues the currency. If the government knew that the budget was limited and they only had x amount of money to spend that year as an absolute maximum, they wouldn't be sending it to foreign countries as foreign aid.
- kranke155 8mo ago
  You’re right that money printing is a problem, the point Arrighi has in his book and writing is this has happened 4 other times and seems basically inevitable. Other powers have had monetary empires and they all go through this.

kranke155 8mo ago

Yes that is literally what the fiat money system is about. By using fiat, dollar as a reserve currency and the petrodollar, the US gets to export inflation and devalue everyone's currency against their own (I think). The best explanation I've seen of this are by Varoufakis, but there are others.