I understand how central bank reserves used to work to support currency value. Back in the days when we wanted a strong dollar. But that was then and this is now. We are in some otherworld now. China buys reserves to suppress their currency, nations compete to debase their currencies by printing or spreading rumor that they may print money. Japan prints money to combat deflation... But either I really have no clue about how this works or something is broken. Currencies are no longer valued according to reserves, they are valued according to spot price and demand on FOREX. To effect the daily FOREX price, you have to buy reserves every single day to impact demand and drive prices up. But how do you drive a currency down? Printing money doesn't drive your currency down unless you use that money to buy everybody else's currency effecting today's price. And again you gotta do this every day to keep those prices suppressed. You could print a gazzillion dollars and offer it for sale on FOREX. That would drive your currency down. But that isn't how money is introduced into circulation. Money has to be lent into circulation. But Japan has been at this for decades printing gazzillions of yen, buying dollar reserves and it really hasn't helped them combat deflation. The world still treats the yen like it is short in supply, or like there is an infinite demand for more yen. And those dollar reserves Japan holds sure aren't supporting their yen! In fact there are actually a lot of examples wherein nations printed gazzillions of their units and inflation didn't materialize. The US of late is just one glaring example. Anybody who thinks they understand this please straighten me out. CA Girl, esp you, since you work with the world's best economists who routinely predict the future with perfect precision.