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| The desired asset holdings of those accumulating wealth leans toward aquiring assets in demand. Oil sales drive a demand for dollars, printing unlimited paper creates an oversupply and thus reduces the value. Thus we see a continued devaluation of currencies as those who wish to aquire wealth are constantly switching between the prettiest horse in the glue factory as more notes are printed by the major countries. A fundamental shift in demand for $US due to fewer transactions being conducted in $US will certainly reduce its value. And the will to divest of $US as its value declines would lead to assets being purchased to unload $US which creates inflation. A rush to purchase assets leads to hyper inflation.
Basically, the value of oil produced is a large component to back the value of the $US. Much like fractional reserve banking that demands expanding debt, the wheels fall off when demand for the reserve currency drops and especially when currency is printed to infinity. Luckily for us the systems are rigged and manipulated in many ways to keep the ponzi scheme working a little longer. Central bank "forward steering" babble is a good example of manipulating currency value. | |
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Why is a trade deficit a bad thing?
