Curiosity about the Dollar

[Sterlino]

Dollar is used in trading between two different countries. Billions of dollars are being transacted all over the world. And this transaction is just by sending an amount as a number from one bank to another bank. Where no one actually sees the paper dollar. The transaction is being completed through digital dollar. So my question is, does the amount of digital dollar that is in all the banks in the world or the amount of digital dollar that is being transacted actually have paper dollar? Has the Central Bank of the United States printed that amount of paper dollar? Or have they also made it valuable to the world by just sending the number with out printing ?

In short, since 1971 the US has no longer limited its gold reserves to printing dollars. Consequently the risk of inflation and as you doubt it is the loss of public confidence in the dollar. But because the US is a superpower, the center of the world economy, the international financial system, it is not surprising that the digital dollar you have can be realized in the form of physical money by the US, regardless of the amount.

Yes I know about that. It is called Nixon shock where the president took such a decision in a short period of time. But I did not ask about that. I asked whether the amount of dollars that is in the bank or in the wallet of a person is printed as amount of digital number.

And I have got a rough idea about this. Some sr members have given their logical opinions. If you have any personal opinion, you can express it.

[pooya87]

You are starting to see the fundamental flaw with fiat currencies and the worst one of them all is the US Dollar which is being printed (digitally) out of thin air. Which is one of the reasons why the US national debt is currently above $40 trillion.

That's the main reason why Satoshi Nakamoto invented Bitcoin, aka the only existing money in the world that also has a capped supply.

So in the future, when the government debt the world, including the debt of the USA, continues to increase, as it fall into a system loop due to constant increase of just a few digits. Where inflation will continue to increase.  and the process is little slower so it become visible after a few years. And when inflation become understandable to people, and they feel that the products price is now out of ability to buy then people will naturally start investing in assets like bitcoin or buy and hold stable assets like gold. And the limited supply feature of bitcoin will make people more interested in it in the future.

Probably but the biggest issue that I would worry about instead is the catastrophic collapse of the financial system. After all a Ponzi Scheme cannot be sustained indefinitely. Remember the 2008 collapse? Even though it dealt significant damage to the economy, they managed to artificially patch things up and postpone the collapse.

That's something that is coming back to bite us again because as I said a Ponzi Scheme cannot be sustained indefinitely. It will fall apart eventually and it is now in its last stages on the verge of collapse and if they cannot postpone it again, the catastrophe will be massive.
All efforts of the US regime have failed to postpone the collapse so far. The tariff war, the energy war, the attempts to invade and take over largest petroleum reserves of the world (to be fair they had some small success in stealing Venezuelan oil, but they failed everywhere else like in Yemen and Iran and the consequence of that failure was massive for the regime since Iran and its allies retaliated and destroyed most of US military in West Asia and dealt an even bigger damage to Petrodollar).

BTW Bitcoin was invented in 2008 and was went live in 2009 after that collapse, maybe even because of it. Isn't that interesting?

[Tamaperdana]

Dollar is used in trading between two different countries. Billions of dollars are being transacted all over the world. And this transaction is just by sending an amount as a number from one bank to another bank. Where no one actually sees the paper dollar. The transaction is being completed through digital dollar. So my question is, does the amount of digital dollar that is in all the banks in the world or the amount of digital dollar that is being transacted actually have paper dollar? Has the Central Bank of the United States printed that amount of paper dollar? Or have they also made it valuable to the world by just sending the number with out printing ?

What I know right now is that digital dollars are clearly much more common than paper dollars. This is because many people currently use bank transfers for payments, which is why the dollar is now more widely used. That's why 90 percent of dollars are digital, with the rest being paper. Yes, this is probably because everything is more practical, in my opinion. We're now in a truly modern era, and digitalization is rampant everywhere. That's why it's not just the dollar that's like this; currencies from other countries also use the same system. That is, money flows more digitally.

However, some countries still use paper money more than digital money, such as Myanmar and several other countries. This is because their people may still prefer paper money because their banking systems haven't yet developed a system.

[Loyang]

10 to 15%.

Bank in the day a run on a bank would wipe out the physical money.

Google " run on the banks during great depression"

I understand the issue of banks. If banks keep money, they will not make a profit. They give loans at high interest rates, but they keep people's money as deposits on the basis of paying low interest. And when someone wants to return all their money at once, it is not possible for the bank to return it immediately. Because the bank has invested people's money or given loans to others on the basis of interest.

And since the central bank prints money and releases money to the market on the basis of interest through other banks, then the interest rate that is constantly increasing means that the dollar in the market is automatically increasing due to interest, but in reality, the bank is not printing it regularly. So where will the money come from to pay the interest that is constantly increasing?

You are in the middle of a misconception here, you are only thinking about one person. If you think about the entire economy, then this misconception will be removed. For example, with the amount of money I borrow, I will definitely use it somewhere and earn income from somewhere and from that income I will pay my loan amount and interest.

For example, suppose you have a chocolate shop and you borrow $ 50 from the bank to run the shop and you have to pay interest of $ 5 in a year. Now you take the loan and invest that amount in your business and from the amount of money you earn from that business, you will return the loan and interest amount to the bank.

[abhiseshakana]

You are starting to see the fundamental flaw with fiat currencies and the worst one of them all is the US Dollar which is being printed (digitally) out of thin air. Which is one of the reasons why the US national debt is currently above $40 trillion.

That's the main reason why Satoshi Nakamoto invented Bitcoin, aka the only existing money in the world that also has a capped supply.

So in the future, when the government debt the world, including the debt of the USA, continues to increase, as it fall into a system loop due to constant increase of just a few digits. Where inflation will continue to increase.  and the process is little slower so it become visible after a few years. And when inflation become understandable to people, and they feel that the products price is now out of ability to buy then people will naturally start investing in assets like bitcoin or buy and hold stable assets like gold. And the limited supply feature of bitcoin will make people more interested in it in the future.

Probably but the biggest issue that I would worry about instead is the catastrophic collapse of the financial system. After all a Ponzi Scheme cannot be sustained indefinitely. Remember the 2008 collapse? Even though it dealt significant damage to the economy, they managed to artificially patch things up and postpone the collapse.

Like it or not, many countries depends on the strength of the USD and if USD showing signs pointing towards collapse they will try to prop up the dollar to prevent a sudden collapse. The central banks of the majority of the world's country will not allow it to collapse and will choose measured market intervention and gradual diversification. Even though many country did this under duress but they need to do it for safeguarding the value of foreign exchange reserves, the Collapse of the global export sector,the absence of equivalent alternatives and commodity trade stability. Can you imagine condition if USD face sharp depreciation and in other hand other currency get sharp appreciation.

It will be interesting for discussion, what and extreme or powerful shock which will cause hegemon who have biggest deepest trusted liquidity market where majority of country in world holding their national wealth in the form of US government bonds (US treasuries) and US cash loose its power ?

[Accardo]

As always, here is my question, and it confuses me. When electronic currency is traded even after printing paper currency at a certain rate, doesn't the total supply of dollars/euro used as a medium of exchange in that region increase due to the existence of electronic currency alongside paper currency?
If so, it means that electronic currency as a medium of exchange and paper currency as a medium of exchange should lead to more inflation due to the increase in their abundance. If someone could explain this to me a little more.

Demand drives the printing of paper money, fiat is a physical representation of the digits in our bank account. Don't mix it up, printing is digital, why they print on paper is to meet up with cash withdrawals. During covid -19 US printed money and digitally distributed it her citizens, cash wasn't involved. If you have $50 and withdraws $25 to cash, you'll then have $25 stored digitally and 25 stored in Fiat, a $50 bill in different forms, one is soft and the other hard. It doesn't add.

[sunsilk]

And one simple explanation done by IMF is this;

Any money issuance is a form of debt for the central bank...

which means that even with digital dollar, it's a form of debt for the CB.

However, some countries still use paper money more than digital money, such as Myanmar and several other countries. This is because their people may still prefer paper money because their banking systems haven't yet developed a system.

I think before that Japan is more with paper transactions but, since they're ahead of other countries there's more than 50% of spending for digital payments and they can't ignore that.

One reason they keep them with the paper transactions is about the elderly who are not fond of the cashless.

[Sterlino]

You are starting to see the fundamental flaw with fiat currencies and the worst one of them all is the US Dollar which is being printed (digitally) out of thin air. Which is one of the reasons why the US national debt is currently above $40 trillion.

That's the main reason why Satoshi Nakamoto invented Bitcoin, aka the only existing money in the world that also has a capped supply.

So in the future, when the government debt the world, including the debt of the USA, continues to increase, as it fall into a system loop due to constant increase of just a few digits. Where inflation will continue to increase.  and the process is little slower so it become visible after a few years. And when inflation become understandable to people, and they feel that the products price is now out of ability to buy then people will naturally start investing in assets like bitcoin or buy and hold stable assets like gold. And the limited supply feature of bitcoin will make people more interested in it in the future.

Probably but the biggest issue that I would worry about instead is the catastrophic collapse of the financial system. After all a Ponzi Scheme cannot be sustained indefinitely. Remember the 2008 collapse? Even though it dealt significant damage to the economy, they managed to artificially patch things up and postpone the collapse.

That's something that is coming back to bite us again because as I said a Ponzi Scheme cannot be sustained indefinitely. It will fall apart eventually and it is now in its last stages on the verge of collapse and if they cannot postpone it again, the catastrophe will be massive.
All efforts of the US regime have failed to postpone the collapse so far. The tariff war, the energy war, the attempts to invade and take over largest petroleum reserves of the world (to be fair they had some small success in stealing Venezuelan oil, but they failed everywhere else like in Yemen and Iran and the consequence of that failure was massive for the regime since Iran and its allies retaliated and destroyed most of US military in West Asia and dealt an even bigger damage to Petrodollar).

BTW Bitcoin was invented in 2008 and was went live in 2009 after that collapse, maybe even because of it. Isn't that interesting?

Yes, during a major financial crisis, governments and central banks can usually take steps like debt support or monetary expansion to stabilize the economy. But these will ultimately create inflation. In the case of the USA, a situation has arisen where all the overall economic problems are created together. To overcome the economic crisis in the USA in 2008, they took steps like emergency lending and lowering interest rates(from google). Later, their problems could be gradually overcome. And at that time, Nakamoto published the whitepaper of bitcoin. Although I would call it a coincidence. Even then, if Satoshi intentionally published it at that time, I think it was a logical step for him.

And currently, all the countries that were against the USA have become stronger. Especially China and Russia have the ability to resist the USA in any way. You must have seen that after the USA sanction on the Iranian currency, its value completely disappeared. But they traded oil with China using Chinese yuan. Ultimately, the USA ban or these attacks by the USA, although they caused great damage to Iran, could not defeat it. Rather, the USA itself is being defeated. And Iran still maintains its position strong. And according to recent news, Iranian missile, drone attack in Kuwait targets US military bases.
So it is understandable that the situation in the USA will continue to worsen over time.

You are in the middle of a misconception here, you are only thinking about one person. If you think about the entire economy, then this misconception will be removed. For example, with the amount of money I borrow, I will definitely use it somewhere and earn income from somewhere and from that income I will pay my loan amount and interest.

For example, suppose you have a chocolate shop and you borrow $ 50 from the bank to run the shop and you have to pay interest of $ 5 in a year. Now you take the loan and invest that amount in your business and from the amount of money you earn from that business, you will return the loan and interest amount to the bank.

A country has just been formed right now and it has formed a central bank. It has printed 1 million X currency. It has given loans on the basis of interest. After 1 year, the interest that has increased to 1.2 million X currency, where will it get the additional 0.2 currency from? How will it pay off the loan by producing profit if the central bank has not printed more than 1 million X currency ?

[fruktik]

Dollar is used in trading between two different countries. Billions of dollars are being transacted all over the world. And this transaction is just by sending an amount as a number from one bank to another bank. Where no one actually sees the paper dollar. The transaction is being completed through digital dollar. So my question is, does the amount of digital dollar that is in all the banks in the world or the amount of digital dollar that is being transacted actually have paper dollar? Has the Central Bank of the United States printed that amount of paper dollar? Or have they also made it valuable to the world by just sending the number with out printing ?

This digital dollar situation resembles a financial bubble that's about to burst. Yes, the US can print large quantities of money, but why bother when you can just type a few zeros on a computer and it's done?

Some countries are trying to break free from dollar dependence, but it's not that easy. If I'm not mistaken, the BRICS countries wanted to do just that. Did they succeed? As I understand it, this issue has been a key topic at all congresses, but nothing concrete has been decided on it. So far, the countries of the union have maintained a reserved position.

[Curious T]

In all of this, what I find funny is when people say Bitcoin is created out of thin air. People who support the fiat system should have no moral compass to criticize Bitcoin, even though they are wrong. Fiat is created out of nothing and backed by nothing aside a government. If the government says a currency is no longer valuable, it becomes oridnary paper or numbers on a screen. Bitcoin is so superior.

This digital dollar situation resembles a financial bubble that's about to burst. Yes, the US can print large quantities of money, but why bother when you can just type a few zeros on a computer and it's done?

Every country prints their money the same way the US prints their currency. I don't understand why people talk about the dollar as if it's the only fiat that operates. They all digitally print money from thin air.

[Dareo]

No, a digital dollar in a bank does not mean that its equivalent amount of paper dollars is printed somewhere, the money in the bank accounts of ordinary people is basically commercial bank money and banks can create new deposits through activities such as lending.  Like if you send $100 from a bank, the bank does not have to send the $100 note it has to another bank. Your balance in the bank's account decreases and the balance in the other party's bank account increases. And the banks settle among themselves with the digital reserve balance in the Federal Reserve, so it is not necessary for all the digital dollars in the world to have an equivalent amount of paper dollars behind them.