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hahajk parent
some one really need to explain this in a way I understand, because this sounds very much like "free lunch". Matt Levine explained it as exporting debt ("The US is better than anyone at manufacturing financial instruments"). He also said we get computers in return for entries in a database.

This sounds... untenable? too good to be true? a shakey foundation on which to build an economy?

AnIrishDuck
The entries in a database are IOUs. The US will have to return something at some point, but as we have complete control over our own currency, the terms of the deal are... very flexible on our side.

It's effectively a bet on China's part that (1) it's worth it to build their own industrial base and (2) the US won't renege, at least severely, because of the consequences.

Worth noting that the current proposals to further blow up the deficit may actually accelerate this dynamic, regardless of tariffs, because somebody has to buy these IOUs.

JackYoustra
It's a lot more than this, right. People want dollars because people want dollars, their motives we can guess at but don't know with certainty. With all likelihood it's to buy US G&S (which is very similar to investing in the US) but it could also just be to have dollars to trade amongst each other.
epistasis
When Apple wants to raise money, it could go issue more shares and sell them on the stock market, and their shares are in high demand because expected future earnings are high.

With the US, the expected future utility of a dollar is very very high, at least far higher than most other currencies.

Combine that with the need for enough currency to be in circulation to support the size of the global economy, and you might call it a "free lunch" or you might call it "something that only an utter fucking idiot would ever risk giving away."

And it's certainly not the foundation of our economy, not at all. The foundation of our economy is large tech stocks, absolutely monstrously high GDP, massive investment in the future via scientific discovery, extremely robust protections against corruption that let entrepreneurs flourish, and a military backing it all. The "free lunch" is the reward for topping the rest of the world in all those areas.

deadfoxygrandpa
it's called "exorbitant privilege" if you want to look it up

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