₦airaland Forum

Why the USA deserves the US dollar dominance.

What the US gains from the US dollar dominance is what every country gains from quantitative easing which is extra revenue for government to spend as a result of printing more currency by the central bank but the benefit is marginal. I even consider it insignificant. The USA does not need it. It is however a plus. Depending on the volume of US dollars outside the US, the US will gain from quantitative easing as if the population of the country were greater. Several estimates exist online. Some say the USD outside US territory is 45 percent of total, some say it is 23 percent and I have heard of over 50 percent. If outside to inside is 50/50 then the US is gaining from quantitative easing as if her population were well over 600 million and that would be the only benefit. The higher the population collecting your legal tender or the higher the volume in circulation the more the country can gain from quantitative easing. The total volume of US dollar in circulation is about 2.5 trillion dollars and what you can print for QE per annum must be a negligible percentage of that. The US government revenue in 2025 across all the tiers of government is over 7 trillion dollars per annum I believe. This is why I say the benefit in the quantitative easing on the 2.5 trillion dollars in circulation is pretty much insignificant for the USA. All governments have to engage in QE for currency management because if they do not, currency will become scarcer due to losses and population increase. I have seen video footages of Nigerian yahoo boys flushing wads of naira notes down a toilet to flaunt affluence. There are many other avenues by which currency move out of circulation and if your money supply is stable or decreasing as a country amidst rising population, there can be a kind of distortion as prices of goods will be forced down. There will be deflation.
Then as it stands today, the US dollar is a facility for international trade. Without this facility, international trade will have to be by barter along with its clumsiness. Nobody is forcing anybody to transact in the US dollar but it makes international trade much easier and it is a reliable store of value. As a result of this, Chinese, Indians, Yoruba and etc are happy to transact in it. Nobody is happy to transact in the naira for instance unless at gunpoint because it is not a good store of value.
Then once again, the US does not need the advantage to be prosperous since other nations have been prosperous without having the advantage. However one nation has to take it up and the USA has worked for it. I am an Ijesa man for instance and Ijesa is a Yoruba sub nation that has been around for over a thousand years. It rose from the ruins of more ancient Yoruba nations like Erinmoje that is now defunct. Before the modern era, we bought and paid for our sovereignty in blood and further bled to sustain it. There is a long list of wars. In the past two hundred years alone there have been Pole, Fejeboju, Kiriji and many others. There was no United Nations security council or US military bases scattered around the world to stop nations from going to war against each other but nowadays nation building has become like going to a party for those who want to build their nations at least as far as peace is concerned. It is therefore a Pax Americana that we are enjoying paid for by US tax dollars.
The USA is the capital of the modern world and printing the currency for international trade is just a fringe benefit that they worked for or which came with it.
However in the new world of equality that we are fighting for, the bill for security must be picked by all in a jointly funded United Nations

All the threats going towards the BRICS is because of the fear of losing that dominance.
There's a reason the United States made the dollar the currency of international trade.
They didn't exactly work for it. It was through a mix of coercion and arm twisting.

ElSudani:
All the threats going towards the BRICS is because of the fear of losing that dominance.
There's are reason the United States made the dollar the currency of foreign trade.
They didn't exactly work for it. It was through a mix of coercion and arm twisting.

The US did not make the USD the currency of international trade. Till today and since the end of the second world war the largest economy with the lowest inflation is the USA. Traders chose the USD by themselves.

lawani:
The US did not make the USD the currency of international trade. Till today and since the end of the second world war the largest economy with the lowest inflation is the USA. Traders chose the USD by themselves.

That is a lie, the dollar supremacy started with the oil crisis in the 70s when the US economy was badly affected by oil OPEC oil embargo.
Herry Kissinger arm twisted the Saudis into making the dollars the only currency for oil transactions.
What you should be interested in is why and not if it happened.

ElSudani:
That is a lie, the dollar supremacy started with the oil crisis in the 70s when the US economy was badly affected by oil OPEC oil embargo.
Herry Kissinger arm twisted the Saudis into making the dollars the only currency for oil transactions.
What you should be interested in is why and not if it happened.

What was happening between 1945 and 1973?. Oil trade after all is a fraction of global trade. On the overall, majority of international traders are collecting dollars and nobody forced them though some barter is going on

lawani:
What was happening between 1945 and 1973?. Oil trade after all is a fraction of global trade.

US was a dominant economy in this period but that didn't exactly translate into the dollar being the dominant trading currency.
The most traded commodity in the world both in volume and in value is crude oil. So, go figure.

ElSudani:
US was a dominant economy in this period but that didn't exactly translate into the dollar being the dominant trading currency.
The most traded commodity in the world both in volume and in value is crude oil. So, go figure.

It is still a fraction of the total. If exporters don't choose one currency to be collecting their jobs will be more difficult

lawani:
It is still a fraction of the total. If exporters don't choose one currency to be collecting their jobs will be more difficult

But in what currency are other commodities traded now in the world? Once you put a system in place and everyone is using it then it becomes normal. So, if you export or import oil which is done in dollars you are more like to ask for the familiar currency when you want to buy or sell your cocoa.

ElSudani:
But in what currency are other commodities traded now in the world? Once you put a system in place and everyone is using it then it becomes normal. So, if you export or import oil which is done in dollars you are more like to ask for the familiar currency when you want to buy or sell your cocoa.

Our bone of contention is was it forced?. I said No it was not. It became the standard practice because it was more convenient for everybody

lawani:
Our bone of contention is was it forced?. I said No it was not. It became the standard practice because it was more convenient for everybody

Not exactly at gun point but it was a whole lot of pressure from the Americans. And it was not because of convenience but because it offers a whole lot of advantages for the Americans mainly because the Gold standard came to an end. It was actually very important to the American dollar and the American economy.

ElSudani:
Not exactly at gun point but it was a whole lot of pressure from the Americans. And it was not because of convenience but because it offers a whole lot of advantages for the Americans mainly because the Gold standard came to an end. It was actually very important to the American dollar and the American economy.

My submission pointed out that the effect on the economy is negligible. By how much a year is the whole 2.5 trillion dollars in circulation inflated?. If other countries don't need such to be prosperous the US too don't need it but international traders need a good currency to use to facilitate trade. The benefit a year to the US will be like fifty billion dollars out of government revenue exceeding 7 trillion dollars

lawani:
Why the USA deserves the US dollar dominance.


What the US gains from the US dollar dominance is what every country gains from quantitative easing which is extra revenue for government to spend as a result of printing more currency by the central bank but the benefit is marginal. I even consider it insignificant. The USA does not need it. It is however a plus. Depending on the volume of US dollars outside the US, the US will gain from quantitative easing as if the population of the country were greater. Several estimates exist online.

Some say the USD outside US territory is 45 percent of total, some say it is 23 percent and I have heard of over 50 percent. If outside to inside is 50/50 then the US is gaining from quantitative easing as if her population were well over 600 million and that would be the only benefit. The higher the population collecting your legal tender or the higher the volume in circulation the more the country can gain from quantitative easing. The total volume of US dollar in circulation is about 2.5 trillion dollars and what you can print for QE per annum must be a negligible percentage of that. The US government revenue in 2025 across all the tiers of government is over 7 trillion dollars per annum I believe. This is why I say the benefit in the quantitative easing on the 2.5 trillion dollars in circulation is pretty much insignificant for the USA. All governments have to engage in QE for currency management because if they do not, currency will become scarcer due to losses and population increase.

I have seen video footages of Nigerian yahoo boys flushing wads of naira notes down a toilet to flaunt affluence. There are many other avenues by which currency move out of circulation and if your money supply is stable or decreasing as a country amidst rising population, there can be a kind of distortion as prices of goods will be forced down. There will be deflation.


Then as it stands today, the US dollar is a facility for international trade. Without this facility, international trade will have to be by barter along with its clumsiness. Nobody is forcing anybody to transact in the US dollar but it makes international trade much easier and it is a reliable store of value. As a result of this, Chinese, Indians, Yoruba and etc are happy to transact in it. Nobody is happy to transact in the naira for instance unless at gunpoint because it is not a good store of value.


Then once again, the US does not need the advantage to be prosperous since other nations have been prosperous without having the advantage. However one nation has to take it up and the USA has worked for it. I am an Ijesa man for instance and Ijesa is a Yoruba sub nation that has been around for over a thousand years. It rose from the ruins of more ancient Yoruba nations like Erinmoje that is now defunct. Before the modern era, we bought and paid for our sovereignty in blood and further bled to sustain it. There is a long list of wars. In the past two hundred years alone there have been Pole, Fejeboju, Kiriji and many others. There was no United Nations security council or US military bases scattered around the world to stop nations from going to war against each other but nowadays nation building has become like going to a party for those who want to build their nations at least as far as peace is concerned. It is therefore a Pax Americana that we are enjoying paid for by US tax dollars.

The USA is the capital of the modern world and printing the currency for international trade is just a fringe benefit that they worked for or which came with it.
However in the new world of equality that we are fighting for, the bill for security must be picked by all in a jointly funded United Nations

Interesting insights on the historical accendancy of the USD since the Gold Standard was abolished to pave way for the Petrodollar-based global economy.

One of the major downsides of the USD being a global reserve currency is that whenever the United States Federal Reserves increases interest rates, especially with the horrendous global economic downturn from the early 1980s during the former President Shehu Shagari years, it causes recessions in multiple countries and these countries started defaulting in their loan payments which were tied to the USD from international creditors.

So, these sequence of events led to dire global geopolitical consequences such as military coups in countries located in Africa (including Nigeria), Latin-America and more to effect regime changes and that ushered in more corruption and regional instabilities from these military dictatorships and more.

Konquest:
Interesting insights on the historical accendancy of the USD since the Gold Standard was abolished to pave way for the Petrodollar-based global economy.

One of the major downsides of the USD being a global reserve currency is that whenever the United States Federal Reserves increases interest rates, especially with the horrendous global economic downturn from the early 1980s during the former President Shehu Shagari years, it causes recessions in multiple countries and these countries started defaulting in their loan payments which were tied to the USD from international creditors.

So, these sequence of events led to dire global geopolitical consequences such as military coups in countries located in Africa (including Nigeria), Latin-America and more to effect regime changes and that ushered in more corruption and regional instabilities from these military dictatorships and more.

That is why it is a free market. Interest rates normally follow inflation rate. If inflation is high, interest rates will be higher. What obtains presently is a free market and if the US fed is not ethical the dollar will lose its edge. I think it is OK the way it is.

lawani:
That is why it is a free market. Interest rates normally follow inflation rate. If inflation is high, interest rates will be higher. What obtains presently is a free market and if the US fed is not ethical the dollar will lose its edge. I think it is OK the way it is.

You're right about the bolded. It's simply a cyclical global financial and monetary pattern which discerning folks and investors have to be constantly aware of.