Quote:
Originally Posted by oilyfan
This to some people is not a very palatable solution, which puzzles me. I recognize the danger of inflation, but the arguments I hear have to do with the prestige of the US dollar in the world and it becomes devalued that hwo does the US shows its face. That's a ridiculous argument.
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It's not about prestige. The US $ is the world reserve currency. If you devalue it, it will cause incredible upheaval in the global system. Take China - the RMB is currently pegged at 7:1 to the US $. If the US $ is devalued, suddenly China is very unhappy (aside from the enormous quantities of Treasuries it holds which will be discounted). China will follow suit and devalue to maintain relative parity. Etc, etc, etc...