Re: Currency and Seigniorage

L D wrote:


> However if you are the US, you can continue doing the same thing for a
> long time. All you need to do is to print dollars and give them to
> foreigners who use them for transactions. The paper dollar notes
> outside the US represent debt that the US government has taken from
> foreigners, however it is not debt that can be called in. And it earns
> the holder ZERO INTEREST. Or NEGATIVE INTEREST if you take US
> inflation (currently about 3%) into account.

Someone wrote on counterpunch that every drop of oil sold in the world 
is an indirect subsidy into the pockets of the American consumer, 
because of the effect it has on propping up the dollar.  Imagine if the 
dollar was not supported by Saudi oil: the dollar would instantly fall 
to the level sustained by US exports and imports, imports from China 
would become prohibitively expensive, and the US would be able to buy as 
much as it exports.  Manufacturing jobs would rush back into the US. 
Instead, what we have is Bush complaining to the Chinese that their 
currency is too low, and an unfair advantage to them.  Ironic.  Maybe 
the dollar is too high...



Hasan