That’s not what “control the value of the dollar” means.
Look, I control where I put my feet. I can put my feet all sorts of places. I can place my feet on the hearth in front of a comfy fire. I can play footsie with a hot chick. I can kick a jerk in the nuts. I can even put my feet off the side of the bridge if I wanted.
Would there be negative side-effects for placing my feet where there is no ground to support them? Sure. Absolutely. But that doesn’t change the fact that I control where I put my feet.
The US controls the value of the dollar. It can print more dollars. It can print less dollars. It can print so many dollars that the only good use for the American buck would be toilet paper. All of these choices demonstrate our rather extensive control of the value of our currency. Deliberately causing inflation is, by itself, control over the dollar.
But using our control as a cheapo method of paying our international debts is the high-finance equivalent of me stepping off a bridge. We have the power, we have the control, but that doesn’t mean it’s a good idea.
It seems to me that decoupling only sounds like a good idea right up until Russia starts rattling its saber at the rest of Europe, and then suddenly the dollar will seem like a good thing to hold onto again.
I have never fully understood the money supply, but I am not sure that this is the entire story.
You are of course right that flooding the market with dollars (either through the printing press, lowering interest rates, or issuing government guarantees of failed financial institutions) has an almost entirely inflationary/devaluing effect.
But so too do many other things – commodity prices, trade imbalances, budget deficits.
I agree that printing more dollars is rarely helpful, though.
The entire story could fill several textbooks. I was just trying to boil down the essence of the misunderstanding. The concept of “printing money” is easy to wrap our heads around, even if the modern Fed also has much more sophisticated tools at their disposal.
None of your additional examples necessarily have inflationary effects, but more important, all of them could be easily out-powered by sufficiently zealous and reckless policy makers.
Even if there’s a strong wind outside, I still get to choose where I put my feet. And even in a continually changing economic environment, the US government still gets to decide how much a US dollar is really worth.
Errr… Yes, indeed one could say that the USA “controls the value of the dollar” when it makes decisions that result in its value collapsing as a side-effect. Sort of. :dubious:
I fail to see, however, how this make the American debt a no-issue because the USA “control the value of the dollar” as the poster I originally responded to seemed to imply. Except if bringing cartwheels of dollars to buy a post stamp isn’t an issue, of course.
If you don’t mind, I’m still going to assume, though, that this poster rather thought that the USA could get rid of its debt and keep the value of the dollar stable when he wrote “we control the value of the dollar”.
Now, if I’m mistaken about what he meant, I will readily admit that indeed the USA can create hyper-inflation whenever it wants and that it will effectively made the issue of debt moot, while causing an historically unprecedented crash of the world economy. Maybe we should begin growing vegetables and raising poultry in our backyards.
It was popular in part because most people assumed it would be a short and relatively inexpensive war. There was no need to raise taxes (something Bush would avoid if at all possible) at the beginning. I think I recall some pundits claiming that the profits from rebuilding Iraq would cover the costs.
Wasn’t the pundits ,it was the neo-cons. they said Iraqs oil would pay for it. They sold a bill of goods they drew in the sand. It keeps shifting away from us and blurs . It justs keeps shifting until we go broke.