Now you are asking the right questions! Just keep in mind, for god's sake, that there is no national debt. It's fine to call it debt, just so long as you realize it is not really debt. What we call government "debt" bears no relation to private sector or U.S. State debt. I don't know the answer to your question, I can only guess. I would expect that the dollars reserve status will continue to decline slowly over time. Congress would therefore be able to adjust its deficits slowly over time to accommodate the dollar's increasingly smaller role as a reserve currency. I'll be dead, but you may live to find out what happens. This, below, is such a simple identity, why can't folks on ET figure it out??? U.S. "outside"* money** in other than U.S. Government hands = total money spent or transferred by the U.S. Government - U.S. taxes*** From this identity any 5th grader could understand that if taxes equal money spent or transferred there will be no U.S. money left in private hands. In other words, for there to be any outside money, and therefore any inside money,i.e. "bank money", in the private sector economy, the U.S. Congress must create a deficit. Our money comes from deficits!!!!!!!!!! __________________________ *Any money that moves from a U.S. government ledger to any non-U.S. Government ledger, or vice versa, is "Outside" money. **U.S. Money in all forms including Treasury Securities. ***Here, the broadest possible definition of U.S. government Taxes is intended.
I'll keep in mind there is national debt if you don't mind. As to taxes equal money spent/transferred. Of course taxes can't equal all money in existence. Never has, never will. Any 5th grader could understand that as well. If what you say is true how do other countries systems work? Again 3rd base, because blah blah blah we are the worlds reserve status money huh?
Canada, Australia, Great Britain, Japan and U.S. C.B.s all work similarly with regard to how the funds rate is controlled. And they all have to obey the same simply identity with regard to spending, taxes, and deficit creation. Don't know exactly how the ECB does it. They don't have a truly integrated monetary union because Germany insists on blocking the creation of a Euro Bond.* This may eventually cause the European Monetary Union to fail. I know in the U.S. it is our Congress that decides how much new money will be created when they decide how much spending and how much taxing to do. (Fed has no say) Don't know the specific mechanism for deciding taxing and spending in a parliamentary system, but probably it's similar. We recently joined these other countries in the simpler way they regulate the Funds rate. Previously we used a more cumbersome method based on controlling aggregate bank reserves with a set reserve requirement in place. Now there is no reserve requirement. Doesn't matter because necessary reserves are always available to solvent banks. Only one bank failure so far in 2024 among more than 4500 FDIC banks. _________ *There remains an utterly insane influence of Austrian-School-economics in German financial affairs.
Failures are how banks (i.e Austrian School) use to learn not to take unnecessary, imprudent risks. FED backstopping them, allowing them to grow too big too fail means no way Jose will they ever fail until ........... Great!