ThatsTooOP t1_jegdnrx wrote on March 31, 2023 at 8:36 PM

Well, imagine you and your friends like to play a game where you trade toys with each other. If everyone agrees to use marbles as the currency for this game, it becomes easier to trade toys because you all know how much marbles are worth.

Now, imagine that many countries around the world trade oil with each other. They also need a currency that they all agree is worth something, so they can trade oil easily. For a long time, they agreed to use the US dollar as the currency for trading oil. This means that when countries buy or sell oil, they use US dollars to do it.

aresyves OP t1_jegeiih wrote on March 31, 2023 at 8:42 PM

Thanks for this! I have another question based on what u/ejpierle said above. Now that we all agreed on marbles as the currency to trade for toys, what happens to toy trades if I create or aka print more marbles?

ThatsTooOP t1_jegf5x4 wrote on March 31, 2023 at 8:46 PM

If you print more marbles in the toy trading game, their value decreases. Similarly, if a country prints more currency for trading, its value decreases, leading to inflation. In the case of oil trading, if the US prints more dollars, the dollar's value may decrease, and other countries may find a different currency to use for oil trading or create their own.

Kelend t1_jegikzy wrote on March 31, 2023 at 9:10 PM

> what happens to toy trades if I create or aka print more marbles?

Nothing. You can just keep making/printing more marbles with no ill effects. Some people will claim this causes "inflation", but its not true.

BigPawh t1_jegwrwi wrote on March 31, 2023 at 10:52 PM

This take is very against the grain and I'd like to hear further explanation if you don't mind

Tuga_Lissabon t1_jegph8e wrote on March 31, 2023 at 9:58 PM

Even more important:

Let's say you now want to force John to lend you his bike. He doesn't want to. If you're the one who decides that this person can't use marbles, suddenly you stop him from trading with everyone else.

It is really good to have that power.

The issue occurs if you abuse your power too often, then guys will say "let's skip marbles, how about we also do trade in Sports Cards?"