Because trade deficits induce demand for dollars? Like how Japan and now China hold a bajillion US dollars? So if the US had (prolonged) trade surplus, no one would be holding dollars?
But wouldn't trade partners still need US dollars to buy US goods? Like the situation post-WWII?
So then we'd "loan" partners US dollars to buy our stuff?
Aiugh. My brain just broke.
How does a noob like me learn about these systems. I know it all probably makes sense to the learned. But with my folk (mis)understanding, these claims sound counterintuitive.
Lemme try:
Because trade deficits induce demand for dollars? Like how Japan and now China hold a bajillion US dollars? So if the US had (prolonged) trade surplus, no one would be holding dollars?
But wouldn't trade partners still need US dollars to buy US goods? Like the situation post-WWII?
So then we'd "loan" partners US dollars to buy our stuff?
Aiugh. My brain just broke.
How does a noob like me learn about these systems. I know it all probably makes sense to the learned. But with my folk (mis)understanding, these claims sound counterintuitive.
Thanks.