Eli5: Why is the U.S. Dollar so powerful?
In: 208
Add to the very nice explanations above, ever heard the old joke about if you owe the bank $100 they got you by the nuts but if you owe them $100,000,000 you have them by the shorts ones?
Well, in our case, we (USA) buy more shit than anybody else on the planet and in essence tell them (everybody), we’ll pay you in Dollars, lump it or leave it. This works in reverse, also. Case in point Russia recently told the EU, pay us in Rubles or fuck off. Ruble has climbed as a consequence of all the EU nations doing exactly what they railed against doing.
Someone mentioned China . . . they don’t ‘want’ Rimimbi Yuan to be too strong because that forces buyers to look elsewhere for cheap goods, think Vietnam, Phills, etc. so they play a very careful game of peg the Dollar but not. And circling back to the bank analogy, take it to the bank they (China) took notes of what Ruble experienced.
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