Fiat Money – paper money, which not backed by gold i.e no intrinsic value and created out of nothing by the power of an issuing authority. Let say to produce USD100 dollar note, 50 cents is the cost of printing and paper, so the remaining value of $99.50 is a gain to the currency issuer, called Seigniorage. So they will earn greater seigniorage by printing money in huge quantities, in term of Economic of Scale. Imagine in Bali, Indonesia which accepts USD as trading currency, US Government could buy almost the entire land with only basic capital of 50 cents of printing .
US Federal Reserve enjoys this huge seigniorage from the US dollar, since it is used as international trading around the globe. Resources of developing nation are being "stolen" by this system, through the magic of seigniorage. United States gets the benefit out of it, by obtaining oil from Saudi using newly created fiat money, just by printing it - obtain the oil with money created out of nothing, while Saudi struggle with hard work and huge investments.
US can create additional money for use outside the country without placing an inflation domestically, however if all of the dollar around the globe were to return to the US, they will surely be hyper inflationary. During the 1971 the US government began to printing more and more money for the Vietnam War, which is not allowed to be returned back to US, in order to avoid inflation - as what Japanese Imperial printed lots of money, which resulted into inflation.
US Federal Reserve enjoys this huge seigniorage from the US dollar, since it is used as international trading around the globe. Resources of developing nation are being "stolen" by this system, through the magic of seigniorage. United States gets the benefit out of it, by obtaining oil from Saudi using newly created fiat money, just by printing it - obtain the oil with money created out of nothing, while Saudi struggle with hard work and huge investments.
US can create additional money for use outside the country without placing an inflation domestically, however if all of the dollar around the globe were to return to the US, they will surely be hyper inflationary. During the 1971 the US government began to printing more and more money for the Vietnam War, which is not allowed to be returned back to US, in order to avoid inflation - as what Japanese Imperial printed lots of money, which resulted into inflation.
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