&quot; If the economy shrinks people need to pay less in Taxes which lowers the demand for dollars.&quot;<p>If the demand for dollars is due to taxes, more taxes create more demand and it&#x27;s not decided by the size of the economy but by the level of demanded taxes.<p>&quot; Similarly, if the Government spends more than it takes in by &quot;Printing Money&quot; that also devalues its currency.&quot;<p>I suppose you mean, devalues its currency respect another currencies. This is not always the case, but if it is, that would imply that imports are expensive and export cheaper.<p>At the end of the day, what counts is the real economy. If in order to reduce debt you are downsizing the real economy you are not doing a good business.<p>I don&#x27;t understand your last paragraph.