Since all money is created as debt, every unit of money outstanding is A's asset and B's debt, someones surplus and someone else's deficit. In any particular economy, all government deficit will be equal to private sector surplus unless their is trade imbalance (current account mismatch). If it is able to run a trade account surplus then both private and public sector can run in surplus. But if there is a trade deficit then either or both public and private sector will be in deficit. This is not sustainable. Once Private sector runs in deficit it leads to recession.
Situation is different for US because it can pay the rest of the world in its own currency. In this case it can just pay the currency and record it as a liability in a computer and forget about it (until the money comes back to the US to be used). Hence the ability to sustain a deficit is maximized by having a currency accepted by the rest of the world. Of course the rest of the world loses by accepting the currency that is continuously being diluted.Naturally, countries will try to limit their holding of the USD, unless they have other reasons to hold USD, eg. to keep their currency suppressed for active Mercantilism. This is possible by trading with each other without going through the USD. This could be one of the reasons for emergence of the Euro block. It is an attempt to by pass the USD, by having one currency so that the individual holdings of the USD can be minimized.
Having rest of the world accept your currency is a major reason and manifestation of USA's global hegemony. All the world accepts its currency and so it has greater ability to spend. Greater spending power results in big military power used to control the world. That is not to say it is the only reason. The ability to deliver innovation and leading the world forward technologically is probably a bigger reason. But what sustains it all is the economics, which is tremendously skewed in USA's favor.
Situation is different for US because it can pay the rest of the world in its own currency. In this case it can just pay the currency and record it as a liability in a computer and forget about it (until the money comes back to the US to be used). Hence the ability to sustain a deficit is maximized by having a currency accepted by the rest of the world. Of course the rest of the world loses by accepting the currency that is continuously being diluted.Naturally, countries will try to limit their holding of the USD, unless they have other reasons to hold USD, eg. to keep their currency suppressed for active Mercantilism. This is possible by trading with each other without going through the USD. This could be one of the reasons for emergence of the Euro block. It is an attempt to by pass the USD, by having one currency so that the individual holdings of the USD can be minimized.
Having rest of the world accept your currency is a major reason and manifestation of USA's global hegemony. All the world accepts its currency and so it has greater ability to spend. Greater spending power results in big military power used to control the world. That is not to say it is the only reason. The ability to deliver innovation and leading the world forward technologically is probably a bigger reason. But what sustains it all is the economics, which is tremendously skewed in USA's favor.
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