> If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
I don't think this is true. The US issues currency in two forms:
1) Deflating dollars
2) Treasury notes
At the time you've issued a T-bill worth $1B, the effect is pretty similar to printing $1B. If interest rates are in-line with inflation, it's a safe way to maintain foreign reserves. If interest rates are higher -- long-term, the US has a problem, and if they're lower, the foreign government has a problem.
But issuing treasury notes is not too dissimilar from printing physical dollar bills.
I don't think this is true. The US issues currency in two forms:
1) Deflating dollars
2) Treasury notes
At the time you've issued a T-bill worth $1B, the effect is pretty similar to printing $1B. If interest rates are in-line with inflation, it's a safe way to maintain foreign reserves. If interest rates are higher -- long-term, the US has a problem, and if they're lower, the foreign government has a problem.
But issuing treasury notes is not too dissimilar from printing physical dollar bills.