Bad News You Can Safely Ignore
When you see this argument, you can ignore it. In fact, you should suspect the author’s understanding of the banking system.
Digital money never leaves the U.S. banking system. Digits called dollars are owned by people all over the world. They function as money. The best example is the oil market. It is mostly conducted in dollars. But this money is accepted by foreigners.
Can foreigners buy up goods? Yes. But this does not bring money back into the USA. It never left the USA. It is in banks that are under U.S. government jurisdiction because they do business here.
Ownership changes. But money does not somehow move out of the country.
A seller of Chinese goods accepts dollars. But where are these dollars located? In banks inside the USA. Chinese residents do not buy and sell inside China for dollars. There are no digital dollars in the hands of Chinese who do not own a U.S. bank account.
There are physical dollars in circulation in third world nations. But these dollars do not return. They serve as alternatives to their own fiat currencies. These people do not buy U.S. goods. They buy domestic goods. Where do they get paper U.S. dollars? From relatives in the USA who send the dollars to them.
The foreigners who own digital dollars can buy anything they want today. They may buy goods used by Americans, such as Venezuelan oil. But this has nothing to do with a vast supply of digital dollars held off shore in foreign banks. These bank accounts are used by people who buy goods that are sold in dollars. It has nothing to do with digits that can somehow flow back into the U.S. banking system. The money never left the U.S. banking system. Digital dollars do not circulate in foreign nations.
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Published on February 13, 2012. The original is here.