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by Fade_Dance
438 days ago
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It works the other way as well. Ex: exporting dollars solidifies a bid for US debt (because by far the easiest way to use excess dollars is to buy US treasuries), which allows the US to keep easily exporting dollars. When capital flows to the US are sustainably strong, the dollar performs well (which is amplified from being the reserve currency for international trade), which means foreign capital is incentivzed to join the bandwagon (strong dollar + strong US assets performance = great returns for international participants). It's self reinforcing to the upside, and it's theoretically somewhat self-reinforcing if it unwinds as well. |
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