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re: How does the U.S. control the value of dollar by soaking up drug trade money?
Posted on 12/13/16 at 10:20 am to HempHead
Posted on 12/13/16 at 10:20 am to HempHead
quote:
I haven't tried to break it down (or read from someone who has), but it seems plausible on the surface.
I get that it's a great way to soak up excess U.S. dollars...but how does that translate to controlling the value of the dollar?
That's the missing link which is going over my head.
3
Posted on 12/13/16 at 10:21 am to mizzoukills
quote:
I get that it's a great way to soak up excess U.S. dollars...but how does that translate to controlling the value of the dollar?
By controlling M1 supply. Eliminating these dollars from circulation could prevent excessive inflation.
Posted on 12/13/16 at 10:24 am to mizzoukills
quote:
I get that it's a great way to soak up excess U.S. dollars...but how does that translate to controlling the value of the dollar?
That's the missing link which is going over my head.
I have never heard this, but if they are removing money from circulation they might be implying that this makes money more scarce and therefore relatively more valuable.
Of course that explanation ignores the massive amount of credit extended during the last 8 years.
Posted on 12/13/16 at 10:24 am to mizzoukills
quote:
value of the dollar
I didn't see what you are talking about so I don't know if value means literally what the dollar is worth or more so that the dollar is very useful.
Drugs being traded in dollars means the dollar will be internationally used and will keep dollars moving. There was worry for a while that Euros with their 500 euro bills would displace the dollar since you could carry more currency in lesser space.
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