Consider this:
Country A has a lot of bad debts. Country A needs money to clear its bad debts, so it prints more money to sell so as to clear its toxic debts.
Country B buys the money Country A prints. But why would Country B be willing to buy Country A's money?
Country A must have, or must be producing, or must be credible enough to promise to produce what Country B wants right?
Now, replace "Country A" with the "United States", and Country "B" with the rest of the world.
There you have the simple answer.
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3 comments:
how about country A is "M*D*F*"?
Madoff you mean? Regarding the Ponzi scheme?
Ponzi scheme is based on generating gains out of virtually nothing.
I think United States have more credibility than that, and a track record to prove. Examples abound - technology (intel, microsoft), hollywood movies, tv series such as american idol, i could go on.
the fact is, there are enough pple who wants american products and ideas to make them want to buy american dollars so they can buy those products and ideas and technologies and whathaveus..
america's real long term competitve advantage is her ability to attract talents.
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