Re: Currency and Seigniorage

In article <[EMAIL PROTECTED]>,
 [EMAIL PROTECTED] (L D) wrote:

> Actually the currency is very important. The worldwide use and
> acceptance of the dollar gives the US the benefit of "seigniorage".
> 
> Suppose you are Brazil and are merrily consuming more than you are
> producing. The day of reckoning soon catches up with you, with your
> debt downgraded, no new loans to be had, and generally the economy in
> a mess.
> 
> 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.
> 
> The benefit of "seigniorage" to the US is about $25 billion a year

You're misusing the word "seigniorage." It refers to the difference 
between the face value of a coin or piece of currency and the cost of 
producing it.
-- 
D.F. Manno
[EMAIL PROTECTED]
"They that can give up essential liberty to obtain a little temporary
safety deserve neither liberty nor safety." (Benjamin Franklin)