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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Doren who wrote (1367053)	7/16/2022 1:19:26 PM
From: Broken_Clock	Respond to of 1578303

What's your level of economic education? You know what a debit card is? ++++++ How Does a Country “Export” its Inflation?Published on June 22, 2021 Updated on August 20, 2021 by Tim McMahon 1 Comment This question is interesting because most countries can’t just export their inflation because their currency is exclusive to their country. However, the U.S. is in the unique position of being the “reserve currency” of the world. In addition, several countries like Panama, Ecuador, and Zimbabwe, actually use the U.S. dollar as their currency and don’t even have their own currency at all. So the U.S. currency has a greater than normal influence on other country’s economies. Exporting inflation is a Government’s dream scenario. If they could print all the money they wanted and not suffer the consequences of their actions, it would be a dream come true for politicians. Printing money boosts the local economy in the short term. Initially, the government gets to spend money without raising taxes and this money generally goes toward government projects like infrastructure, military, and boondoggles. This creates jobs and the workers spend the money into the economy and for a while, everyone feels richer. But eventually, the chickens come home to roost and a “bust” results as prices start rising because there is more money chasing fewer goods. But if the government could have the “good side” of inflation i.e. the “boom” without the “bust”… why then we’d have a politician’s dream come true. For many years now the U.S. has been in this enviable position. And surprisingly it was created by one of the most vilified Presidents in U.S. history… Richard Nixon. I go into more detail in the article Oil, PetroDollars and Gold but the gist of the matter is that in 1973 Nixon and Kissinger struck a deal with Saudi Arabia that they would denominate all oil sales in dollars, and in exchange, the U.S. would supply weapons and protection to the Saudis. This system of requiring all worldwide oil sales to be performed in dollars increased the demand for dollars (since everyone needs oil) and became known as the “Petrodollar”. These petrodollars not only increased demand for the U.S dollar but also allowed the U.S. to export its inflation as these dollars never return to the U.S. but instead circulate worldwide and are used strictly for foreign trade. In addition to “PetroDollars,” the U.S. has an unlikely ally in exporting its inflation. ++++ theconversation.com 1. Even more inflation Petrol and most commodities such as metals or timber are usually traded in US dollars (though with exceptions). So when the dollar gets stronger, these items cost more in local currency. For example in British pounds, the cost of US$100-worth of petrol has risen over the past year from £72 to £84. And since the price per litre of petrol in US dollars has risen steeply as well, it is creating a double whammy. When energy and raw materials cost more, the prices of many products go up for consumers and businesses, causing inflation around the world. The only exception is the US, where a stronger dollar makes it cheaper to import consumer products and therefore could help to tame inflation. 2. Low-income countries under threat Most developing countries owe their debt in US dollars, so many owe much more now than a year ago. As a result, many will struggle to find an ever increasing amount of local currency to service their debts. We are already seeing this in Sri Lanka, and other countries may soon follow suit. They will either have to tax their economies more, issue inflationary local money or simply borrow more. The results could be deep recession, hyper-inflation, a sovereign debt crisis or all three together, depending on the path chosen. Developing countries which fall into sovereign debt crises can take years or even decades to recover, causing severe hardship to their people.