LtDan

Is the $ (USD) considered "toilet paper"?

https://lemmy.world/post/44533186

Is the $ (USD) considered "toilet paper"? - Lemmy.World

Where did that saying originate? I’ve heard that type of response from some people: the US Dollar is considered such due to being “backed by nothing” & excessive printing (is it really losing any value as they have debt that’ll never be paid?) What is it backed by: military muscle? I know that for instance the Swiss Franc is backed by trust (as in people having faith in the currency). Do YOU consider the US Dollar a safe haven currency? If it were: it would’ve received the same status as the Swiss Franc. The reason why CHF is strong is due their trust & confidence alongside a stable economical & political system, put it in comparison: how many Americans have confidence in their own currency? Does the USA have a “truly” stable political system? The thing is: Switzerland is neutral, meaning they have no incentive whatsoever on becoming belligerents in foreign wars (something the USA can’t stay away from since they spend a LOT of money on the military). Their national debt is lower than it is in USA (140m CHF / ~$179m) while in comparison: America’s debt has ballooned to around $38,200,000,000,000 if I recall. It’s also tied to their monetary policy (which is highly trusted) hence why they managed to keep inflation relatively low but inflation in America as a joke (no need to say how bad it is). Their interest rate is 0% (can’t be said for US Federal Reserve: 3.75%) as Switzerland’s goal is to ensure price stability long term while the USA is more on promoting maximum employment.

Mar 21 at 12:00amWeb
Show threaddavel2d ago

In most states (meaning countries), all base/narrow money[^1] is backed by the fact that the state will only accept its own currency for taxes due. Which means that, if the state has no debt, then there is no (base) money. The base money in the economy is equal to the state’s debt. All the base money in the economy came from the state at some point buying goods/services/labor.

The US dollar is a safe haven insomuch as it’s likely to continue to have value for the foreseeable future, but it isn’t necessarily safe compared to the value of other currencies. In fact, IMO the US dollar is likely to continue falling w/r/t other currencies in the short & medium term, thanks to the deterioration of the petrodollar system and of dollar hegemony. We’re also a fading empire, and our economy is hyper-financialized, awash in debt, which doesn’t help. We’ve de-industrialized and don’t have a viable path to re-industrialization.

[^1]: Most of the money in the economy isn’t base money. It’s money created by banks writing loans. The principal of a loan was money created out of thin air, which the state authorizes the bank to do. As the principal is paid off, that money is deleted from the system; it’s destroyed.

the USA is more on promoting maximum employment.

It’s supposed to be that, but in practice it isn’t. The Federal Reserve has a dual mandate, but they’re in conflict with each other, and really the maximum employment part is only given lip service.

Monetary base - Wikipedia