Quote:
Originally Posted by GoinAllTheWay
So does that mean that the US buys more then it sells? I don't get how a country could keep running if that's the case.
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Government debt/deficits, consumer debt and foreign investment.
But yes, what you are getting at i think is true, long term it all has to equal out. You cannot borrow forever and ever.
Of course you could do what America does and literally and shocking simply print more money but that SHOULD increase inflation and eventually drive foreign investment (and confidence) away - thus reducing the value of the dollar. If any other country printed money like America they would have long ago pulled an 'Argentina' in terms of foreign valuations of their currency.
Lucky for them global trade is primarily done in USD, as are the largest stock/bond markets. Even this advantage is being eroded over time though, with booming markets in London and Hong Kong (among a number) and efforts by countries like Iran to price oil in Euro's. SOME suggest that when Iraq started pricing in Euro's it was the last straw for war....
Claeren.
PS - The explanations were not 100% correct IMO but i don't have time to add to them...