If country A wants things from country B, country A has pay for it in country B's currency. Of course, only few countries can say I only pay US$ or Euros, take it or leave it. Money supply must be backup by size of economy and not the other way around.
Which may lead to this... hyper inflation.
The 4 legs provide the power to move the cart. Human has only 2 legs and stand upright.
So, it does not fit into our perception that human has to be behind the cart. Every country that uses fiat money has to "print it." That's the origin of modern money. If they don't supply enough to their economies, they will have to print some more to avoid deflation. If they print too much, they can swap some of it for interest paying securities, or they can remove it from the economy by levying taxes. Some Countries (eg., the U.S., Japan, Canada, etc.) can print as much as they want, don't have to borrow and have no real debt. If they are smart the won't print faster then their economies can absorb the new money without too much inflation. And they won't tax so much that they cause recession or deflation. Countries whose currencies are unstable and not trusted by other countries may be forced to borrow in other countries currencies in order to carry out international commerce (eg., Turkey, Argentina, Ecuador, Russia, etc.) These countries have real debt.
Your entire explanation is I think what the politicians hope is the way that it will continue to work, but I'm not so sure. Do you not think that the change from stable to unstable can happen very quickly? And once you lose that stability, how do you get it back? When you read stuff like Russia wanting to price oil in something other than dollars, you have to wonder how close this change from stable to unstable is.
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Who knows,
Venezuela, Zimbabwe, Iran, Turkey have to print 24x7.
.,................................................................Indeed, it can happen quite rapidly. Monetary systems have always required good management with high integrity to remain stable and lasting. But there is another attribute that I believe is essential for long term stability and that is openness, meaning all the citizens of the country should understand correctly how the money they use is created, what gives it value, and what are the necessary constraints if the currency is to remain reasonably stable. At the same time they don't need to understand details of Central Bank and Treasury operation. Hopefully they will also understand why all capitalists countries use fractional reserve banking and the advantage that gives any economy. And too they should understand why we don't use a gold standard anymore and how a gold standard unnecessarily handicaps an economy.
Nevertheless their external debt is real debt. The U.S. has no real debt.
