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| *Ostroff, Fair and Company>>>Other - Business & Finance |
Could someone please explain why the US dollar has plunged in value to a 15 year low? |
The US Stock market has reached new highs. I am sure that there are infinitely more macro factors (ie interest rates...), but the dollar seems to be a continual down spin that has hurt many companies that import. What does the US have to do to strengthen its currency? Whose in the position of power to guide the US this way? For bonus points, could you explain the strategy China uses to gain advantages many would call unfair to trade with the US. I understand the fact that they peg their currency... what about investing in the US directly? What does that mean? I understand they have taken a position in a large amount of the US dollar. What are the consequences of such action in relation to trade? Thank you all for answering, it is greatly appreciated!!! well, what happened to the USA 15 years ago that is the same of today? War. It costs plenty of money to keep soldiers at war and last time they threw the world into a recession. Hope this isn't too bad a thing to say for the yahoo moderation team, it is the truth, lol. The chinese do well because they are capable of finding out what is bringing the money in then they'll do the same thing for half of the money so they'll steal the market. The others won't work for less so they'll give up. At that point the chinese are the only ones on that particular niche so they are able to charge more money as the competition is all dead. They have done that with tons of niches, good luck to them, I wish they weren't soo insular though. Which explanation do you want? Republican or Democrat? They're very different. massive national debt. usa imports way more than it exports. particularly with china. usa long ago moved its production overseas or abandoned it all together in favor of cheap prices due to lower labor costs in foreign countries. this devalued the dollar by making the debt grow and grow. combine that with near limitless spending on the war in iraq and you have a recipe for a weka dollar. because the dollar is weak--meaning it takes more dollars to buy less goods--importers are at an advantage. the u.s. has to pay more for imported goods. and they receive less for the things they export. the u.s. can do very little to strengthen their position. they do not produce enough to reduce imports significantly. this is mostly a product of the ftc allowing business to outsource their entire operation overseas which saves them money on labor, drives down prices but the money from that business stays at the top. there's no 'trickle down' as reagan would say, to the middle class. only the higher managers, executives and stock holders benefit. china does not trade its currency, the yuan, on the open market. it price fixes according to the u.s. dollar. that means the u.s. never really gains anything on the yuan because the exchange rate is always the same. that strategy has taken on a lot of criticism lately but there's little the u.s. can do about it because the u.s. still depends so much on cheap chinese imports. direct investment in the u.s. means they want to start buying up american companies or at least buy large somewhat controlling stakes. this gives china more leverage when the yuan starts trading openly. open trading will no doubt devalue the yuan somewhat so the protection for that is to control the u.s. companies that do business with china. Good answers so long. War, debt and the rising of China are some of the answers. Same for a country as for one human, war and debts are lowering your capacities and your value. http://index-go.com/peace |
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