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by ilaksh
2635 days ago
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I believe there is a physical limit to how far you can stretch that because it takes actual resources to make things for people to consume. We only have a certain amount of oil supply and reserves, minerals, etc. Which is why its not feasible for every country to just consume as much as they want, because some percentage of the money is tied to real things in a finite world. Countries with more resource control may be able to take that concept pretty far. But it doesn't come from them just deciding they want more stuff. |
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Value is subjective. Energy intensity of global GDP has been falling for decades [1]. Where I've seen estimates, it looks like material intensity has been doing the same.
Broadly speaking, most countries won't have a reserve currency. Neither their demographics nor economy can support it. But some countries punch above their weight. Canada, Switzerland and Japan have outsized influence for (a) being trading economies with lots of buying power (i.e. lots of overseas vendors end up with their currency) with (b) limited or no history of currency controls (i.e. people aren't in a rush to swap out of the currency, for fear of it getting trapped), and (c) stable governments and central banks.
Given (b) requires free capital flow, which through the impossible trinity [2] means giving up a fixed exchange rate or monetary sovereignty, reserve currencies aren't something most countries may even want. Using dollars tends to be fine. Having alternatives in Europe and China is probably for the best, for everyone, in the long run.
[1] https://yearbook.enerdata.net/total-energy/world-energy-inte...
[2] https://en.wikipedia.org/wiki/Impossible_trinity