Does the US Government Borrow for the World?

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kiwi_canuck's picture
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Joined: Oct 8 2008
Posts: 19
Does the US Government Borrow for the World?

If money is loaned into existence, and the US dollar is the reserve currency, does this mean that the US government (via the Fed) has taken on debt to provide money for foreign countries to transact business?  For example, if (in New Zealand) buy steel from Korea I do so in US dollars.  Who took on the debt for those US dollars?   Is the US liable for all the US debt?



OptOut's picture
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Joined: Jun 24 2012
Posts: 14
There are a number of ways

There are a number of ways those dollars could have come into existance. An individual could have borrowed them from a bank, the bank  then receives dollars from the FED through the  fractional reserve system. Or they could have been created from the MBS purchaces by the FED. Or they could have been created through the FED  by buying US debt. There are many other ways. There is no way to tell how specific dollars are created. Don't think that because you have a dollar somebody owes somebody that same dollar. That dollar should have been paid off with interest, so now its just in circulation. Interest is why the dollar supply must expand exponentially or there would never be enough dollars to pay off the debts. Since all dollars are loaned into realty with interest there will always be more debt than dollars. This is part of what is causing the problem today, not nearly the root cause just a part of the cause.

 US debt is owed by "the people" or the US citizens.

I hope this helps. 

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