" Today, the US Dollar is the international reserve currency—making
the US special. … the two main reasons why the US can run persistent
current account deficits are: a) virtually all its foreign-held debt is
in Dollars; and b) external demand for Dollar-denominated assets is
high—for a variety of reasons.
The main reason seems that the U.S. issues the main reserve currency
and you issue a liability (so to speak, it’s fiat money) internationally
fully accepted even without a commitment to convert it in something
else."
--http://www.concertedaction.com/2012/05/06/born-in-the-u-s-a-mmt-and-monetary-sovereignty/
Everybody wants dollars, and the only way to make more dollars (as opposed to borrowing them), is for the US to run a deficit. The whole world finances the deficit by using dollars.
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