1.2. The process of exporting inflation from the U.S. to other countries

Channels of inflation distribution:

1. At the consumer level, inflation spreads through global supply chains and international trade.

Many goods, such as electronics, clothing, and consumer products, are purchased on international markets in U.S. dollars. When the dollar depreciates, the cost of these goods rises. Retailers who source their products in dollars are forced to increase retail prices to compensate for higher import costs. This leads to inflation at the consumer level, reducing purchasing power. Additionally, rising transportation costs, such as fuel expenses, further increase logistics costs. As a result, end prices for consumer goods rise, making them less affordable for the general population.

2. At the business level, inflation spreads through commodity trade.

Most global transactions involving natural resources such as oil, gas, metals, and agricultural products are conducted in U.S. dollars. Importing countries must pay for these resources in dollars, and when the Federal Reserve increases the money supply, the value of the dollar declines while commodity prices in dollar terms rise.

This leads to higher costs for natural resources, driving up domestic prices for fuel, energy, and raw materials. As a result, production costs increase across all stages of the supply chain, intensifying inflationary pressure. Businesses and consumers end up paying more for essential goods, reducing purchasing power and weakening economic stability in resource-importing countries.

3. At the national level, inflation is exported through government debt obligations.

Central banks of various countries hold foreign exchange reserves in U.S. government bonds, considering them reliable and liquid assets. However, when the Federal Reserve expands the money supply, the dollar depreciates, reducing the real value and yield of these bonds.

When the Fed raises interest rates, the cost of new borrowing in dollars rises, while older bonds lose value on the secondary market. As a result, debt servicing becomes more expensive for importing nations, fueling inflation and forcing governments to cut domestic spending. Currency fluctuations against the dollar further exacerbate the problem, increasing both debt servicing costs and the price of imported goods.

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The Global Risks of Dependence on U.S. Government Bonds.

The purchase of U.S. government bonds by central banks of various countries and the use of the dollar as a reserve currency place these nations in a position of dependency on the Federal Reserve's monetary policy.The Fed's actions, aimed at stabilizing the American economy, often have negative consequences not only for Americans but also for people worldwide.

Rising inflation, declining purchasing power, and increasing living costs are all direct outcomes of policies that affect billions of people globally. The self-serving and corrupt American elite effectively shifts a portion of its inflationary risks onto the rest of the world.

Countries that hold reserves in dollars or rely heavily on the dollar within their economies experience higher prices and diminished purchasing power of their reserves, placing additional strain on national economies.

By investing in U.S. government bonds, central banks of different countries mistakenly believe they are placing funds into a "safe" asset. However, past positive performance of these bonds does not guarantee future stability.