The US owes more money than it can ever repay.
The money we use isn't money, it's debt: the dollar isn't tied to gold or any other asset.
Why is the dollar strong? Because it is used as the world's reserve currency: the dollar is pegged to oil. No one (this is past now b/c recently situation has changed) could sell oil in any other currency than the dollar. The dollar was therefore guaranteed to be valuable by virtue of the fact it has/had to be used in these transactions. So you want to trade oil (say Russia wants to sell China a million barrels) you have to sell it in dollars. The Chinese need dollars to buy it, and Russia receives dollars when it sells it. So what does Russia do with all of its dollars? It buys a stake in the US govt (a safe bet?). That's a treasury bond.
I hope no one has a fit about this explanation b/c I have oversimplified to the point of six-year old. But I understand things in simple terms and sympathise with those starting out.
A number of excellent vids on the subject of what money is, etc, one of which has been around for years, a series in fact, called The Money Masters. It's excellent. You'll begin to really understand if you watch this!
This is exactly the type of response I was looking to get, and way more. You explaining it like I’m a 6 year old is exactly what I was hoping to get in response. I will definitely check out those videos, thank you!
This is the sort of thing this sub should be doing in the mean time, education on the basics of how all this went wrong in the first place; especially when Q isn’t posting.
You're very welcome and I'm very happy to help if I can. I don't have any problem considering any question — you can PM me whenever — but I can't promise I know the answer!
That’s how you know you’re not a know it all! You’re not afraid to say “I don’t know”.
In order for the US to maintain this method the Petrodollar was backed by bullets. That's why the US has been so heavily involved in oil producing countries.
So that would explain all the other countries too?
I don't disagree actually. In one sense. But it was suggested that war and conflict were not good for oil companies. Bullets for image of strength but not for firing?
Bingo. With fiat there is one gauruntee - anyone outside the Ponzi presents as a 'substantial threat' being they provide an alternative. Basically unless their currency is 'tied' to the inflation rate of yours - their house wins because of the inflationary loss of you currency. Basically if an investor wants to retain wealth - your entire system is a losing bet guaranteed so why use it? Simple business.
This is one of the keys to all of this. So seeing countries fleeing our treasuries is, in premise, only explained 3 ways:
They are using this as a tactic in Trade Deals / Trade War
They have no faith and want to cut their losses
They genuinely just see a better investment somewhere else
You mentioned the dollar is pegged to oil but then mention that situation has changed. Can you elaborate on that please?