what is the worst thing that can go wrong if a country keeps having trade deficits? If the answer is it will run out of hard currency, is n't the solution just that the authorities can exchange hard currency for their own currency?
137342
When we import products from other countries we spend US currency to purchase them. This money then goes to fuel the economy of whichever country the product came from. (We pay applicable taxes on these products that go to our local city,state and federal government.) If other countries do not buy our products and we keep buying there products this affects jobs and the value of our money. A devalued dollar can work both ways. It will affect US citizens in a negative way and affect foreigners in a positive way. Hopefully the people we trust to keep this balance can manage to keep it in check. I hope this answer puts some light on the topic.
18348
There is no "why" to it. Each unit of currency exists independent of the others; some will have a higher value than the dollar, others will have lower value. Some may even start out higher and be lower later due to inflation.
335864
Exchange rates are not "decided" they are negotiated.  Currencies are just like commodities.  The price is set by supply and demand.  People needing currency exchange the currency they hold for the one they want.  Millions of these transactions happen daily.  The exchange rate at any moment in time reflects the last exchange of currencies at a given price.  If their are inconsistencies among several currencies, professional traders spot them quickly and buy the cheap one and sell the pricey ones and drive them all back to equilibrium.  If many people are buying (selling) one currency the price (exchange rate) will rise (fall).
574294
Correct!  You make perfect sense.\n\nBut if you make perfect cents you'll be arrested by the government for forging currency.
659451
First it is freedom.  True freedom, personal, religious, and political is the solution. With out that your country will continue as it is forrever.  No amount of international help (food, money, pats on the back) will help. Those things only keep those in power stay in power.
111042
a) When economic conditions are bad in the nation.\nb) When there is an external threat to the nation.\nc) When they can find a scapegoat of some type to give the populace something/someone to blame in order to "unify" the country.
199702
The national debt is actually something that is undermining our national security by handing over a very large portion of our economy to foreign powers.\n\nIn international finance, everything is balanced through a very complicated system including value of exported and imported goods, value of currency, value of precious metal reserves (gold & silver), and other valued goods. When the US spends more than it makes as a nation, there are several things that could happend: 1. Other countries step in and "loan" money to the US through the purchase of Treasury Bills (T-Bills); 2. The US dollar is devalued (i.e. goes down compared to other currencies).\n\nRight now, foreign nations are purchasing T-Bills in order to loan the US the money that it spends. Basically, the T-Bill is a note that promises the purchaser that the US Government will pay back the money owed.\n\nThe problem is, when other countries have large amounts of these T-Bills, they effectivly control the US economy by the threat of dumping the t-bills onto the international market. For instance, if China decided that it really didn't want the US to supply arms to Taiwan, it could take all of its T-bills and dump them in the international market. Overnight, the US Dollar would plummet, thus raising the cost of imported goods in the US. The result is that $5 t-shirt made overseas now costs $10. Inflation would be rampant, businesses would shut down, unemployment would rocket up, and the US economy would be in tatters in a matter of weeks.
307707
The bottom line is it is about the all mighty dollar.  Maintaining access to foreign goods means that our government feels a need to exhaust our resources to "make nice" with other countries to help them with their strife--at the sacrifice of our own needs.  Sure there are some of the richest people on the planet here, but not all.  There are also a lot of severely impoverished as well.  We need to get our priorities straight as a nation.
586275
It wouldn't work because it would require a mass undertaking that the government is not willing to do.  Making all current money obsolete and changing the "face" of currency is a huge ordeal.  Not only does it require the government to create the money, it would have implications all the way down the chain!
404648
This question belongs to 'Economics'. \nThe answer is 'no' because it may lead to market failure.
135766
A very good question. Here are my thoughta.\n\nFirst the US is running a trade deficit with those countries, which means that they are selling less than they are buying, however with each of these countries, they are taking the extra money they gat and investing in US debt (bond T-notes etc.) So the money flows back into the US and creates demand for their currency. If the US changed their policy, then this influx of money and investment would dry up, creating a situation where the US would have to raise the interest they pay on their government debt, which would slow down the economy, which would put people out of work, which would create more need for US debt, which would mean they would have to raise rates again. And this would become the death spiral that Japan has gone through for the last 10-12 years.\n\nHope this helps.
394846
Budget deficits are only good when\n(a) there is no risk of inflationary pressure\n(b) the country is in recession\n(c) whatever is loaned is spent on increasing productivity.\n\nWhile fiscal discipline is worth striving for, it would be problematic if low interest rates result in a blow-out in consumer borrowing.
291812
I wouldn't trust the government to take out the trash,hopeless and evil,what can the world do? nothing,too many conflicts already and  the so caled do gooders scream IMPERIALISM any time another country gets involved....copperprices will rise marginally but the people will receive no benifit
642034
It's not really a case of losing courage when you look at the size, growth and devlopment that is occurring in China.  We are not the only super power in the world today.\n\nThe real risk would be if China decided to call in the US loans resulting from the deficit, stopped buying US denominated bonds and put trade restrictions on US imports.  After all without China the US Dollar would be flushed down the financial toilet instead of treading water in the toilet bowl!
482373
What's the Worst That Could Happen?
321932
a) Demand for dollars declines, reducing its value.\n\nb) Payments in China are in US currency, but if prices are lower, demand for dollar will decline as will its value.\n\nc) Assuming no decline in imports, demand for dollars increases, increasing its value.\n\nd) Increased supply likely, so value goes down.\n\ne) Relative demand for foreign currency increased, thus moving value of dollar down.\n\nMake sure you vote!\n\nc
123367
I don't believe we will fall to another country but will fall internally. All great nations have before and will also in the future. More than likely when our economy begins to fail.