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Replying to Avatar Undisciplined

Maybe in the grand scheme, that's what's happening. Most of "we" are not trading productive assets for foreign goods, though. We're trading our dollars for foreign goods and we aren't accepting foreign currency for our products. That's the discrepancy in currency demand from one being the reserve and the others not.

It's the next step where holders of dollars (foreign or domestic) invest in dollar denominated assets. The first imbalance leads to the next.

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Kurt 8mo ago

Exactly, it is the first imbalance leading to this one, which is why it is important the first imbalance is addressed.

But to be clear, any time you buy foreign goods you're feeding the continuation of this trade pattern.

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