The depth of this pool is determined by the national debt. The more debt we create, the deeper the pool. Today there is an insatiable worldwide demand for dollars, and thus there is an insatiable worldwide demand for American debt.
How do we create more debt? If you're a Democrat, you expand entitlements. If you're a Republican, you fight endless wars.
The Panic of 2008 was triggered by a lack of dollars to lubricate the machinery of global finance due to the collapse of American real estate values combined with Goldman Sachs shorting its own mortgage-backed securities. Treasury Secretary Hank Paulson, who uses profanity the way a surgeon wields a scalpel, was right when he said to Goldman Sachs boss Lloyd Blankfein, "You had a good thing going, but you f***ed it up!"
In order to create more dollars to fill a rapidly expanding black hole in the world of finance, the Dubya and Obama administrations spent wildly, and the drug cartels were asked to bank their ill gotten gains in American banks on a one time basis while the government promised to look the other way.
If we change our profligate ways and reduce our debt, or even pay it off altogether, it would collapse the entire global financial system. Neither the euro nor the pound nor the yen nor the renminbi is deep enough to handle the daily exchange of currencies. You would have to go back to gold, and that would set off a wave of global deflation and currency contraction that would create a global depression for decades until the world could adjust.
Not saying you’re wrong, but holy cow this is contrarian.
Your post is the truth.
The only way for the little guy to protect himself from inflation is to have assets that rise in nominal price as the inflation proceeds.
Outstanding summation of U.S. dollar dominance, sir.
Not to mention the fact that up until recently, oil purchases around the world were near solely conducted using the U.S. dollar, hence The Petro-dollar.
US debt growth went to sh1t in 1971 when Nixon de-coupled the dollar from gold.
Up until then, foreign countries could redeem dollars in their equivalent value of gold which up until 1971, was $35 / per ounce of gold.
BTW, an ounce of gold =$1330 at this time.
Gold did not go up in price as much as the dollar and other tethered currencies have de-valued since then.
Nixon sent Kissenger over to Saudi Arabia to make a deal that All OPEC oil trade was to be done in US dollars.
In return, the US promised back the SA Royal families without question.
The worm is turning - BRICS nations are turning toward using the gold backed Petro-Yuan for oil trade.
Someday the SHTF for the US dollar, and global financial reset will result in a digital unified world currency system likely linked to IMF SDR basket of currencies.
RE: “The dollar is king because it is the only pool of currency deep enough to handle $4 trillion of foreign exchange per day in the currency markets. No other currency comes close.
The depth of this pool is determined by the national debt. The more debt we create, the deeper the pool. Today there is an insatiable worldwide demand for dollars, and thus there is an insatiable worldwide demand for American debt.”
Educate me. Why is it that they can’t simply print more dollars out of air? Why is it they have to spend to create this? I understand that’s how banks create money when you acquire a loan but if we control the curreny why do we need to spend as a government?
(I really don’t know so that’s why I’m asking.)