link to original reddit post by /u/omgcoin

It's painful to hear when Keynsians sarcastically asking - so where is inflation?

In order to see immediate results of post-COVID money printing, they should look at classical fiat currencies which aren't in demand outside domestic market (e.g. Russian Ruble, Uzbekistani Som).

Russia and Uzbekistan are my two home countries. In both countries, consumer prices are rising quickly. It's safe to say that it's already double digit increase for essential goods and services.

In Russia, things are so bad that "very clever" Russian government have predictable response - establish price controls (as if they were born today and never seen what's happened countless times before).

Moreover, if you pick random country further away from Western block, you can see that nearly all of them in a big trouble now. For example, Turkish Lira is almost in free fall now (they started imposing capital controls now).

US dollar is not typical fiat currency, it's the world's reserve currency. Overseas demand for US dollars and US bonds (which can be monetized by Fed) offsets immediate negative effects of money printing. In this sense, the rest of the world subsidizes reckless Federal Reserve. The only reason why they are still doing it is because their fiat currencies are even weaker. People in countries like Uzbekistan look at US dollars as Americans look at gold. In other words, the whole world compete who is more inflationary, who prints more money.

Other western countries enjoy similar privilege of being second, third, forth reserve currency/bonds on foreign balance sheets.

So why third countries still park their capital in US dollars and bonds? The short answer is because the rest of the world is even more socialist than US (with exception of some small countries with more free economies). Namely, independent private sector is virtually non-existent outside of western countries (I consider developed Asian countries like Japan as western countries). Only detached from reality American liberals might think that Western countries are rich due to more controlled economy than in third world countries like Russia and Uzbekistan.

In the US, extra dollar supply which isn't consumed by outside world is going into pretty well developed financial markets (as a promise of future profits from relatively strong private sector) and then slowly spread throughout the rest of the economy (through real estate, tuition fees etc) causing much more delayed consumer price inflation.

However, American (and more broadly Western) credit card will come to the end as soon as either of the following happens:

  1. US government decides to go full FDR. What American liberals forget is that the world is much more free and capital (including workforce) is much more mobile than in FDR era. Capital stays in US as long as US is a little more capitalist than the rest of the world (among major economies);

  2. Even if US government stays as it is now (i.e. bloated, inefficient, bureaucratic), other major economy might liberate their economy to the point of being more free than US. It will trigger capital flight to that economy. So far the rest of the world is even more socialist but it's not given for granted that it will stay the same in the future;

  3. Even if neither of above happens, Bitcoin and other high-quality cryptocurrencies are expanding exponentially. What many people are missing is that Bitcoin is de-facto new extraterritorial sovereign entity. Namely, people might park their capital in these synthetic extraterritorial jurisdictions (i.e. blockchain networks) as well as give the rise of massive, uncontrollable parallel economy (i.e. agorist case, especially after next generation of zero knowledge proof-based networks will come to live);