Let's say that being a single nationalistic reserve currency gives inordinate power in the hands of a few.
Some societal benefits are:
- There will never be shortages or famines like the Irish potato famine. You need potatoes, you print money and go get them
- There will never be shortages of labor. You need services and companies to support the massive infrastructure, you pay cheap labor and get them. This is why even very small counties in the US can handle online utility payments while it's not common in Germany or Japan
- Any time there is a recession, just print money out of it without worrying about inflation. For ALL other countries, the more they print, the lesser their currency goes in valuation. Think Argentina, Asian countries. US has been printing quite a bit as well but all those extra dollars don't cause inflation. They just provide liquidity. The inflation is exported to other countries. This is why so many countries have so many dollars in reserves now
- This printing press minus the inflation is the reason the US nominal GDP is so high. A haircut in US is the same as haircut in India. But a $70 haircut counts more towards GDP than a Rs 70 haircut
- This currency is also the reason why so many countries give visa on arrival to US citizens. Those countries need dollars and they want to make it easy for people to give it to them. The freedom to travel around the world with such a strong currency is uniquely American. Perhaps only bested by the British in the past
- US currency goes through US banks. Which means it is under US purview. This is how the US imposes sanctions on whoever they don't like. This is enormous power honestly. Japan and Korea are in a trade war but they can't really impose sanctions on each other as much as US on Iran.
Overall, being the reserve currency is an undue advantage that the US has. The standard of living in the US is abnormally high because of it.
The US has been printing lots of dollars, with little inflation, because the rate of demand has matched the rate of printing. But it would be easy to print more dollars than are in demand, and that would cause inflation on the dollar just like any currency.
> - This currency is also the reason why so many countries give visa on arrival to US citizens. Those countries need dollars and they want to make it easy for people to give it to them. The freedom to travel around the world with such a strong currency is uniquely American. Perhaps only bested by the British in the past
This is nationalist nonsense. The US wasn't the strongest passport in 2019[1] and hasn't been in the past 4 years[2][3][4].
[1] https://www.atlasandboots.com/best-passport-to-have/
[2] https://www.telegraph.co.uk/travel/news/powerful-passports-2...
[3] https://www.telegraph.co.uk/travel/lists/most-powerful-passp...
[4] https://www.weforum.org/agenda/2016/09/how-powerful-is-your-...
Hint, global assets are all available for purchase on dollars. As more and more products get built in China and other countries and they are all willing to accept dollars for them, the rate of demand for dollars increases.
As for visa on arrival, most countries on it are similar GDP-wise. Which means their citizens have a low cost to convert to USD and their capital accounts are open so citizens can freely chnage into USD.
So their domestic currencies are almost as good as USD (or even Euros to some extent)
> Hint, global assets are all available for purchase on dollars. As more and more products get built in China and other countries and they are all willing to accept dollars for them, the rate of demand for dollars increases.
This doesn't contradict anything I said.
Yes, I understand why demand for dollars is going up. No, that doesn't mean we can just print dollars faster than demand and expect no inflation.
> As for visa on arrival, most countries on it are similar GDP-wise. Which means their citizens have a low cost to convert to USD and their capital accounts are open so citizens can freely chnage into USD.
So would it be fair to say that you're retracting your statement that this is "uniquely American"?
There will, because the potato famine wasn't caused by lack of money, it was caused by monoculture, historically poor land management practices encouraged by foreign interests, and genocidal tendencies on the part of the English.
If the Irish people had the ability to arbitrarily print money the way you suggest, they still would have been starving because the English would have taken the money AND the food.
A low levels of quantitative easing, it won’t matter much, but there is definitely an inflection point.