Why The US Has Room For Unlimited Money Printing

chekohler (70)in #money • 4 years ago

Hey Jessieconomists

The world economy is in the shitter and if you haven't noticed which you should since you're all at home, is that the good old US of A or as I like to call it the USSA, (since we're all technically subsidiaries of this union in some form or other of the modern colonialism through debt) has been printing money like there will be no tomorrow without it.

But how do Donald Trump and his best friend Steve Mnuchin aka Jay and silent snoochie boochie have the ability to print till the cows come home? Wouldn't that cause inflation? Well yes, it would if the value of the dollar wasn't made up of a milkshake of various artificial demand.

The world reserve currency

As the world reserve currency, the USD is what we measure most assets value in, such as Gold, Oil, cryptocurrency and more. It is the standard unit of measurement when it comes to wealth for the world.

Due to this status, it means the rest of the world needs dollars to settle purchases such as international transfers via SWIFT, To purchase oil via the petrodollar, to trade with Europe via the Eurodollar and to buy a host of commodities. Additionally, a lot of countries sell bonds to take out debt to fund projects in their country, and their debt is denominated in dollars, which means they need to pay back in dollars on both the interest and the principle.

Quantitative Easing

Image source - thebalance.com

Outside demand has kept the US safe

This level of outside demand has given the US unprecedented power to regularly dump dollars into the FX market to import goods and have massive trade deficits. It didn't matter because other countries needed those dollars to trade. This is the reason the US was able to become a country run on consumerism; people could just keep buying and important and dumping dollars into the open market because the rest of us need it so badly.

If it weren't the case, the US would experience hyperinflation like never before.

Dollar pegs

There are also countries like China and Hong Kong that artificially peg the USD to their national currency and need to hold dollars in reserve to try and maintain the peg at all times, also making sure dollars remain scarce on the FX market.

Fiat racing to the bottom

Due to the crisis governments around the world have reacted by printing money to fund projects to combat the virus and in doing so, drive up inflation locally making it harder for them to trade internationally.

As their currency inflates, it gets more expensive to buy dollars to service the countries debt, to buy oil for a countries energy reserves and for importing goods and services into your country.

You can see this playing out as the dollar rallies against tother currencies and holds firm against gold while other fiat currencies struggle against both gold and the dollar.

A strong dollar leads to price inflation for other countries and a sort of interest rate hike on dollar-denominated debt and for this season, the US needs to maintain parity or collapse world markets. This gives them the ability to print unlimited amounts of money to do as they please and bring balance to the market.

The show goes on

The dance of fiat is a dangerous one, and it's only a race to the bottom with the dollar being behind all others watching them all run to the finish line to take a bullet to the head.

I think the US has a long way to go with being able to print more and more money, and it won't be too painful in terms of inflation as long as the capital isn't sitting in the local economy.

As the rest of the world's currencies continue to inflate I predict these citizens will be looking to precious metals and cryptocurrency first to store their value and the reason why developed nations don't see the right to adopt crypto or see it as too much of a threat.

As currencies die due to this, we will hopefully see more countries adopt private money an option.

Have your say

What do you good people of STEEM think? How is your local currency fairing against the dollar? Are you storing your wealth in anything other than your local currency?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."