- Aug 22, 2015
- Reaction score
US don’t need reserves because rest of the world accept USD as a mode of payment; which every American has in it’s pocket. There is no requirement for currency exchange for import/export. Plus US Fed reserves print dollars as needed.In a healthy well-functioning economy, there is no need to accumulate huge reserves. Reserve is more like a bank balance used for ordinary transactions over a period of few months. Anything larger is usually invested in wealth creating assets. Hence, this preoccupation with reserves is a meaningless yardstick just as wealth is not normally measured by the size of your bank account. Truly wealthy people become so by investing in wealth creating assets (except those who inherit it or win a lottery). Here is a dirty little secret: U.S. has no reserves at all, in fact we are in hole for 30 trillion. But I don't see too many people crying from morning to night over that.