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39 sats \ 3 replies \ @BlokchainB 3 Apr \ parent \ on: How trump calculated tariffs, shocking if true 🤦‍♂️ econ
But the whole world devalues its currency one way or another.
It's more about reserve currency status than devaluation. Other countries' domestic populations absorb more of the impact of their devaluations than Americans do because so much of our currency is held by foreigners.
Stated differently: the rest of the world demands dollars, which essentially makes dollars an uncounted export of the US. Foreigners buy dollars with their exports. There's no symmetric US demand for foreign currencies to balance that out.
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But why do they demand dollars?To me it means the USA has a constant buyer of its currency no matter what. We keep hearing China and everyone is dumping the dollar but are they really? Dumping it for what?
I think the market sets what the world reserve currency will be.
Think about the people who own $37T of t-bills earning their risk free interest. What is stopping the world from dumping this paper? The feeling of getting something for nothing is intoxicating to humanity. This why Bitcoiners get so involved/interested in the price talk and talk about the tech doesn’t draw the amount of attention the price does.
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Most of the large foreign holders have been reducing their US Bond holdings, which is what “dumping” refers to.
The market does set reserve currency, but it’s a very sticky quality that can’t change very quickly.
As long as we have it, there pretty much has to be a trade deficit.
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