> there will be some demand from the government for dollars
I think an important cause of demand you're missing is that people still need to pay taxes in dollars.
Re:What is money, anyway?
by OscarCunningham on Monday March 28, 2022 @08:35AM
(#30829832)
If people earned bitcoin and paid taxes in bitcoin the government would still need to exchange those bitcoins for dollars in order to pay its debts.
My point is that taxes are a key factor in creating demand for dollars.
> the government would still need to exchange those bitcoins for dollars in order to pay its debts
That is not true. The government does not collect taxes to pay its debt, as it can simply spend its own currency which it creates. Taxes are relevant to spending in that it keeps dollars valuable.
Re:What is money, anyway?
by OscarCunningham on Monday March 28, 2022 @11:04AM
(#30831212)
> The government does not collect taxes to pay its debt, as it can simply spend its own currency which it creates.
Not if it wants to hit an inflation target.
The question I expected you to ask is why people wanted the bonds, since all they're backed by is future dollars. The circularity is resolved by the fact that people know that there will be some demand from the government for dollars, since the government has outstanding dollar-denominated debt.