Let’s say you are the president of a country that has been very successfully trading with your major trading partner and built up huge reserves in that country’s currency. This is both an asset, because you can buy things with it and a liability, because that other country can print lots more currency, thus devaluing what you have.
If you stick it in the bank it earns very modest interest and devalues with inflation and has the large downside of dramatic devaluation with dramatic inflation in your trading partner’s currency. And considering your trading partner is spending more than they are earning, that is on the cards.
If you dump that currency it will quickly become worthless. A not-so-attractive option.
If you buy precious metals with it that is some hedge against devaluation but no income stems from it. Also an unattractive option.
Or, if you got bright you could look around the planet and start buying up income producing assets af lasting value. Things like shipping ports, airports, livestock and crop farms, dairies, wineries and now hospitals.
You could also lend it to other countries for them to do with what they wished knowing full well that if they defaulted on their loans you could legally acquire some assets of that country to expiate the debt.
This is all very well if the country about which we are talking has a benign leadership. But if they are a beligerant neighbour, known to invade and subsume their less powerful neighbours by relocating their own citizens to their neighbour’s land and forcefully removing the citizens of their neighbour inside their own borders, to conduct trade espionage and steal tade secrets, suppress minority groups and religions, conduct state sponsored organ harvesting on live citizens then we have a potentially huge problem.
Then I learned that years ago they announced plans to relocate 300 million of their citizens to African countries to which they have loaned money and we start to see the pieces of a world domination plan fall into place.
