Yeah the details are probably quite involved. I describe it as if every time Norway sells something we get foreign currency and every time we buy something we use foreign currency. But that is obviously a gross simplification. It would not make sense if foreigners buy everything they want in Norway using their currency while Norwegians would have use foreign currency when doing the same.

As you point out there is a lot of variations in how this works. Often I believe the trade happens in dollars as an intermediate currency. Thus what I describe is really just the net effect of multiple currency exchanges at banks, which is not necessarily directly caused by trade, only indirectly.

The precise mechanisms something happen can vary so much, but one can choose to view something conceptually as something. It is like e.g. Modern Monetary Theory. It is really describing the same thing as any other Monetary Theory but in different terms.

Or I guess when you translate a math problem into a geometry problem or reverse. It is the same thing, but expressed in different ways.

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Geek dad, living in Oslo, Norway with passion for UX, Julia programming, science, teaching, reading and writing.

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