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6 sats \ 1 reply \ @Scoresby 3 Sep \ on: How the Dollar Became American (The Daily Economy, Den) BooksAndArticles econ
He thinks of America not “as a country that happens to use dollars” but “a country where commercial banks and the federal government have together become really good at manufacturing a lot of different kinds of dollars.”

We have a hard time thinking of the dollar in our bank account as different than the dollar in our wallet (or money market account or the dollar that is used as a unit of account for our stock portfolio). I certainly lump them all together most of the time.

When a nation stops making things, relying instead on its financialized power to issue monetary promises, you’re likely suffering from an infectious strain of a monetary Dutch disease, where your economy and ultimately your empire may be in great peril.

This confirms my belief that money is a language. Words aren't useful unless you have something to say.

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108 sats \ 0 replies \ @justin_shocknet 3 Sep -210 sats
dollar in our bank account as different than the dollar in our wallet

A fun thought experiment for this is negative rates.

This is something the US could do for a number of reasons, and arguably should. (I think unlikely given the scale of the disruption that comes with it, but also not without precedent to avoid a currency wrecking ball)

All the "dollars" in bank accounts are in money markets, t-bills. In such a scenario, banks would have to pass on those negative yields such that all the monetary premium comes out of the currency.

The dollars in your wallet on the other hand become more valuable, people would hoard and start vaulting them, they're still needed to service their own debts. Once they get hoarded we realize how few of them there are, paper dollar supply would dry up almost instantly.