3 ms·

I don't understand your comment. When you buy or sell currency, the original currency is not destroyed. Or am I wrong?

• loceng 12y ago
  If the USD government prints more money then the overall value of the currency goes down.
  • nhaehnle 12y ago
    There is no such direct causality. The value of a currency (in the sense of exchange rates and prices of goods) is determined by supply and demand, and nothing else. People with the mindset of "USD government printing money => value of USD goes down" have been predicting QE-based inflation for years, and they were wrong. When you drop this incorrect mindset and adopt the correct one (supply and demand!) it's easy to see why: QE did not make people richer, so it did not lead to the kind of significant increase of demand that would be required to trigger a rise in inflation.
  • davidgerard 12y ago
    This is not quite how it works, despite the claims of Austrian economics (which doesn't actually work).