thank you for the great word seigneuriage.  it may be deep in my old memory banks somewhere, but I had to look it up.  the good articles seemed to be in French, and Google translated, more or less.  my french is not that good to read directly and understand.

let me see how close we are in our thinking on this point, because like you said earlier, we sometimes talk past each other.  I agree seigneuriage is a benefit to the US.  but is it not an earned benefit?, that is dependent on the trust of the world in the long term strength of the US economy, and the ability of the US to appropriately manage its debt.  My economic history is a little weak, but I think Great Britain had this position of privlege many years ago, but their economy did not remain strong, and foreigners lost their trust in the ability of the Brits to manage their finances.  So over time, the market decided to remove this trust from the UK, and it ended up in the US.

It's a benefit to the US because as long as they have this trust, they can effectively borrow money, from their own citizens and the world, by simply printing money.  But the flip side of printing money is increasing the national debt, in the form of US Treasury notes.  Foreigners look at US 10 year notes today, and at this very second they can buy such a note which will pay them 4.461% per year, in dollars, for the next 10 years if they choose to hold it.  That is the market clearing price.  (Another diary maybe someday, but this is an incredible innovation in itself that has come with computer technology and well managed financial markets--it makes these financial choices available to you and me, the small guys, and not just the wealth barons.)

So what I'm trying to say is that the US provides a good investment for people outside the US.  They can invest in a stable currency and economy, rather than only having the option of investing in  their own country, and therefore, their own currency.  Why is it viewed as good?  Because the market which changes in real time, says that 4.461% is a good return if it's in dollars.  If the market doesn't believe that, they'll buy fewer notes, the interest rate will have to go up to clear the market.  So this system self regulates.

Traders can do this at anytime with other currencies.  Some traders are viewing the Euro as strong, and buying Euro's today as a good investment.  (I think someone pointed out that Warren Buffet recently disclosed a big loss by betting on the Euro.  On the other hand, many traders made huge gains by doing this during the dollars fall of the last several years.)  So the US has to earn this trust every day--to a very hard group of people, slick investment people who just want to increase their return.  They'd write off seigneurage for the US in a heartbeat, if they lost faith in the US economy, and the US management of it's debt.

If you borrow in your own currency, you let others take the currency risk, a great privilege.

Am I in line with your thinking, and just saying it  in another way (some might say a longwinded way)?  Or am I missing something here?