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Comment: Hi LibertariansUnite

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Hi LibertariansUnite

I don't know of any books but I feel I have a good grasp of the situation. I'm happy to answer to the best of my ability.

First, don't feel bad about reading economic books and feeling overwhelmed. Economics is complex and not an exact science, which is how you end up with such large debates.

The question you ask is a very very good one, though. In my opinion it's a key reason if not the key reason we've been able to hold on so long. We live with a global economy very much interlinked. It gets complex, but there are two key ways other countries actions affect our currency. I'm sure you've heard the U.S. dollar is currently the world's reserve currency. This means countries accept it as a benchmark, something they know they can count on for certain stable value and accepted anywhere else. The central banks of countries desired to hold U.S. dollars in this way to protect their buying power, essentially for energy (oil), even if their own currency suffered/fluctuated, for example, like Argentina's pesos did after their crash in 2001. Gold is also held by central banks as something believed to be a secure store of value. Because of the economic and military dominance of the U.S. in decades past U.S. dollars became more desirable than even gold to hold, and were used to purchase oil. Saddam Hussein announced his intention to switch to selling Iraq's oil for Euros instead of dollars. The U.S. invaded Iraq shortly thereafter. Iraq isn't the world's major supplier of oil, but others could get ideas...

So, getting back on track, whenever something you have is desired by someone else it has value. If it is valued by enough people it can be called "money", because people can hold it as a store of value and re-exchange it anytime. Well, since the U.S. controls Federal Reserve Notes which as described are desired by the rest of the world it can theoretically create as much "money" which will continue to have value as it wants. The problem with doing that, however, is that at a point there are so many dollars created that the purchasing power for any people using them is diminished. Well, who primarily uses dollars? The American people. Well, so what, you might say, at least their government can grow as big as it wants and give out all sorts of things free (seemingly). That's true except for one other thing. The American economy is over 70% dependent on consumer spending. You take away the ability for consumers to spend and you've seriously cut the economy, and therefore jobs.

Okay, so that's one key way other countries affect our currency. They all hold, desire, and accept it which gives it value, even though it's no longer backed by gold. Any point at which they believed it might significantly lose it's value would be problematic obviously.

Another way actions of other countries affect our currency is what they do with their own currency. All major currencies now do the same thing which is print money without any hard backing (like by gold). So the value of any one currency versus another is subject to how the marketplace views it as a store of value. Currencies being printed (inflated) very fast obviously lose purchasing power faster and are therefore not as desired as those doing the opposite, say, raising interest rates meaning less currency in circulation, less inflation, and more buying power. China famously manipulates its currency to keep its buying power very low. This means U.S. dollars can buy Chinese goods cheaply improving China's export portfolio while buying less U.S. goods. China happily gets the economic activity and we just get more indebted.

That's a small taste of the answer. Hopefully it helps. It's by no means a simple subject.