Advantages of the dominant position of the US dollar in the world currency 1. Global trade settlement
At present, more than 95% of global trade is settled in US dollars. Many people may ask, why settle in dollars? Can't I use RMB? Can't you use other currencies? Really can't.
You do business with other countries, and you want to settle in RMB. But the other country should settle in their country's currency! Therefore, we need to find a common equivalent of a currency, that is, the US dollar. The United States has the strongest comprehensive national strength and the best credit in US dollars, and both sides are assured to settle accounts in US dollars. The influence of RMB can only be radiated to several neighboring countries.
2. Buy US Treasury bonds and reserve US dollars.
Because most countries in the world use dollars to settle international trade. It is necessary to reserve dollars or buy US Treasury bonds. The stronger the economic strength, the greater the volume of international trade, and the greater the need to use US dollars. Like China, the foreign exchange dollar reserves are all above 3 trillion. The holdings of US Treasury bonds are also more than $ 654.38+0 trillion. Dollars can be used for settlement, and US Treasury bonds can also be used for trade settlement.
So China can't hold such a large amount of US dollar foreign exchange and US Treasury bonds. Everything is for international trade. After all, the influence of the renminbi can't compete with the dollar for the time being. A country like ours holds such a large number, and the total number held by one or two hundred countries in the world is an astronomical figure. The United States can make full use of this advantage to issue treasury bonds and print dollars.
Although the dollar has the greatest advantage, it is not limited to printing money and dare not do so. 1. Banknote printing mechanism in the United States
The mode of printing money in the United States is different from that in China. China, the People's Bank of China, directly ordered the printing house to start printing money.
The United States must first issue treasury bonds, then the Federal Reserve buys them, and then the Federal Reserve prints dollars. The Federal Reserve is a private institution with a chaebol behind it. These chaebols do business all over the world. They can't harm their own interests for the benefit of the American people.
Therefore, the Fed will print more money, but not indefinitely. The national debt owed by the United States government is your government's business, and it has nothing to do with my Federal Reserve. It is impossible for the Fed chaebol to harm their own interests and pay debts to the US government.
2. Unlimited printing will make the dollar continue to depreciate and global credit will be reduced.
The United States can use the dollar as the dominant position of the world currency and harvest the wealth of the world. But the rest of the world is not a fool. You can forget a small amount of wool. If it goes too far, everyone will fight together and die together.
Unlimited printing of money will inevitably lead to the continued depreciation of the US dollar, which will also affect the global credit of the US dollar. Why is the dollar the dominant currency in the world? Not only because of its good reputation. Now printing money indefinitely, the credit will come down at once. Other countries are mixed.
The worry is that the depreciation of the dollar will hit the domestic economy. Fortunately, with the decrease of dollar credit, China's monetary credit will increase. Of course, those people at the Federal Reserve are not idiots. The powerful relationship here is naturally clear. So, once in a while, forget it It won't do such stupid things as unlimited printing money.
Summary:
The United States has been harvesting world wealth by issuing government bonds and printing dollars. But printing dollars indefinitely is a disaster for the whole world. The United States will not do this, and neither will the Federal Reserve.