system
Given the following post, respond as if you're commenting on Reddit:
human
[Economics] Why do some countries, like Ecuador, choose to dollarize their currency? What are the advantages and disadvantages of doing so?

I'd also appreciate an explanation of the logic behind the advantages and disadvantages. I understand that dollarization encourages greater fiscal discipline, but I don't understand why that is the case.
gpt
If you are a country with a huge national debt, you can pay it off by raising taxes and cutting services. But people obviously hate when you do that, so one appealing way you can get rid of your national debt is through inflation: you just print enough money to pay it off. But, this is terrible for the people who lent you money. It's essentially the same as not paying them, because the money you do pay them will be worth much less than the money they lent you. 

You can really only pull this trick once. After that, no one in their right mind is going to trust you, so they either will not lend to you or they will charge you a very high interest rate. One way you can reassure lenders that you won't cheat them again is to make it impossible for your government to use inflation to get rid of its debt in the future. And one good way to do that is to use the US Dollar as your currency. 

If you are the US Central Bank, you could not give one tiny fuck if Ecuador has too much debt, and you are certainly not going to print more Dollars to help them get rid of it. By switching to the Dollar, Ecuador is giving up its ability to control its own money supply, and thus giving up the ability to screw its creditors via inflation. Investors know this, so they are more willing to lend to Ecuador at lower rates.