USD has no value other than what it can purchase in the US.
Saudi Arabia does not pile up USD, they pile up USD denominated investments.
(basic finance that most people don't realize: When you put money in the bank, and the bank gives you interest, that's not your money in the bank, that's the bank's money. What you own is a certificate entitling you to the stream of interest payments. If you ever want your money back from the bank, you need to give them back the entitlement for the interest payments, and the interest payments will stop.)
the Saudis don't hold US currency, they hold bonds, et al.
> USD has no value other than what it can purchase in the US.
Any currency has value for anyone—or, more importantly, any group of anyones—who gives it value. If a person in Botswana and a person in Namibia want to trade, and they're happy working in USD between each other, then it has value there.
any example token can have value, but will every example? no.
does the paper money of the US confederate rebel states have value? "any failed historical state's currency could have value to the people of Botswana" is not a useful idea.
Yes, I know, POWs used packages of cigarettes for currency, even those that had been passed around so many times that they were mush inside. I took econ too.
> When you put money in the bank, and the bank gives you interest, that's not your money in the bank, that's the bank's money. What you own is a certificate entitling you to the stream of interest payments
When you give money to a bank, the bank owes you money. You are a creditor and you technically own debt (which may or may not give interests). This debt is money.
The money supply is not a uniform things. It goes from actual paper money, through bank deposits which are more or less indistinguishable from paper money all the way to short term deposits and bonds.
Holding deposits and holding safe bonds is not particularly different. It’s more cumbersome to trade but it doesn’t significantly alter the reasoning about what you will be able to do with the dollars you have.
>When you give money to a bank, the bank owes you money. You are a creditor and you technically own debt (which may or may not give interests). This debt is money.
the bank does not owe you the money you put in, they owe you the interest payments.
look up "valuing a perpetuity", study the equations, that's how it works. If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double. They only owe you the original money if you give back your rights to the interest payments.
I did study finance in grad school, I'm not making this up. I am using simplified language to stay focused on the simplicity of what is happening.
A bank account is not a perpetuity. You don’t need to use DCF to value it. Most current accounts don’t even actually give interests let alone an annuity you would need to discount. It is straight debt.
> If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double.
Even for deposits, the way this works is that you discount future cash flow on top of your principal to get to your net present value. The NPV of a saving accounts above inflation viewed as a perpetuity is infinite thanks to the magic of compounding interests. Sadly, “in the long run, we are all dead”.
You must be using a different definition of “owe” than the rest of the world. By any layperson’s and lawyer’s definition, any money you deposit in a bank is definitely owed back to you. And it’s definitely placed in the liabilities column of their accounting books.
Any interest is certainly owed as well since it’s a consideration of a deposit agreement, but both are owed, not just the latter.
if what a dollar can purchase in the US changes, Eurodollars also change. tell me you don't know what "=" means without telling me you don't know what "=" means
In addition to what others said here, some countries, like Ecuador, use the USD as the official currency.
This entire thread smacks of ignorance. I encourage you all to take some basic university level macroeconomics courses before confidently spouting any more falsehoods about how international trade and finance works.
USD has no value other than what it can purchase in the US.
Saudi Arabia does not pile up USD, they pile up USD denominated investments.
(basic finance that most people don't realize: When you put money in the bank, and the bank gives you interest, that's not your money in the bank, that's the bank's money. What you own is a certificate entitling you to the stream of interest payments. If you ever want your money back from the bank, you need to give them back the entitlement for the interest payments, and the interest payments will stop.)
the Saudis don't hold US currency, they hold bonds, et al.