Real Time Economics breaks down the costs:
- 1) When people in other countries hold dollars, they are effectively giving the U.S. zero-interest loans -- a benefit economists call "seigniorage." Annual benefit: about $10 billion.
- 2) When foreign governments and central banks park their dollars in US Treasury bonds, they push down those bonds' yields. That, in turn, pushes down borrowing rates for U.S. consumer and companies. Annual benefit: about 0.50 to 0.60 percentage point, or about $90 billion.
- 3) The dollar's global allure, though, also tends to push up its exchange rate against other currencies. That makes it harder for U.S. exporters to compete abroad, and for domestic companies to compete against imports. Annual cost: $30 billion to $60 billion.
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