Lets look at how many works. I suspect money has a supply demand curve as well. If the fed kept money supply tight - Mundell would be right. If the fed made money loose - there would be so many dollars they would become worth less. Mundell showed the massive unprecedented inflation since the establishment of the federal reserve. Would not that massive unprecedented inflation likely have come from fed the fed monkeying around with the supply of the so called reserve currency? Didn't that massive inflation screw american savers up until the 60s... and contribute to the real estate asset bubble recently which caused us to transfer trillions of dollars to the insolvent banks? Doesn't inflation screw those subject to progressive taxation. Doesn't it take to full time workers to achieve the standard of living it once took one? (I know its not all because of progressive taxes... but..
The Global Economic Asymmetry caused by ''$'' is now facing the toughest challenge ever, therefore, I ratiocinate that this economic evolution of "$" ain't only bound to happen but contemporarily occurring. Generalizing the non-rogue states stocked with US is not that justifiable enough to prove the stable status of ''$'' reserves in the coming years. In this view, I've empirically posted two links that comprehend; not only Bilateralism (where the nations adopt direct exchange trading substituting dollar) beating the "$" http://bbs.chinadaily.com.cn/thread-728918-1-1.html but Multilateralism (then such substitution banging the head of dollar hegemony) establishing asphyxiating pressure http://blog.alexanderhiggins.com/20...ereign-international-reserve-currency-106291/ To add further, the talks of furnituring the 'Bretton Woods 2.0' have incepted for which direct confrontation between US and China is not fundamental in the era of non-traditional security, as the conclusion of the currency/foreign trade war between them will succinctly determine the outcome before 2020.
lol...you do understand that the pound USED to be the reserve currency of the world right? The dollar replaced it, over time so it wasn't at one point or another, but the very devaluation you're talking about could be thought of as the nail in the coffin for the pound being the reserve currency of the world.
You're ignorance has no bottom to it, apparently. Read something, anything, besides mises.org, and then come back and try to say something that's at least less stupid.
The pound-sterling was the reserve currency (in the context of its times) when coal was king. The dollar became the reserve currency when oil overtook coal in importance. Money doesn't matter.
No, a reserve currency is determined by use: as the US transacts trillions in export/import, and has trillions invested overseas, and other countries have trillions invested in the US, the dollar winds up as the intermediary in most fx transactions. The latter part, investments, is a function of confidence: everyone knows they can get their money in and out of the US freely, with no hint of having to worry about capital controls. Hence, reserve currency status. The international market for goods, services and (frequently left out but of at least equal importance ) investments, not any one commodity, determines reserve status.
Japan has the same and is not a reserves currency. The reason "all the bonds are bought " is because the FED, the Treasury and primary dealers coordinate auctions so they don't fail. Making sure their are enough reserves in the banking system. Also with a non convertible floating currency. Bonds aren't used to finance government spending it is done by crediting bank accounts. Bonds are used to give an interest earning alternative to reserves and to drain reserves to maintain the target rate. spending increases reserves and taxes, bonds sales take them away. The Treasury pays the governmentâs bills out of its account at the Fed. Those payments inject new reserves of base money into the banking system. Since the increase in reserves would interfere with the Fedâs ability to implement monetary policy, the Treasury compensates as follows: (1) As the Treasury spends, it replenishes its Fed account with equal transfers from its commercial bank accounts where it deposits its receipts from taxes and bond sales. This removes the reserves of base money created by its spending. Aggregate reserves of the banking system therefore remain unchanged on average, thereby allowing the Fed to make small adjustments in reserves as needed to maintain control of the Fed funds rate. (2) The Treasury replenishes its commercial bank accounts with the receipts from taxes, and from the sale of bonds when there is a shortfall in tax revenues. If tax revenues exceed its spending, it removes the surplus by net redeeming its securities. In this way it minimizes disturbances to the aggregate bank deposits of the private sector. this is not exclusive to a "reserve currency" Japan has double the debt and near 0 rates
That's backwards. Access to the most base of commodities is what drives the ability to spread your currency in the first place. It starts and ends with energy. The rest is a convenient, generally useful, but derived fiction.