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Politics : Foreign Affairs Discussion Group

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To: Sun Tzu who wrote (169289)	8/18/2005 1:38:34 PM
From: neolib	Read Replies (1) of 281500

So the question is why isn't USD worth a lot less (think along the lines of dime on the dollar)? The answer is that you don't have to spend the dollar only in America; you can buy oil with it from all those countries who supposedly hate America. I need to look around a bit at some numbers on this, but IMO, you are focused on only a part of this question. A very large portion of the US dollar's strength is that we have a stable country, and we are willing to spend our way into dept. Banks happily loan to consumers as long as they think it is an OK bet. At some point it stops. In the meantime, the consumer lives a very nice lifestyle. Oil is only a fraction of international trade, so why do you zero in on that as the glue of international finance? Our trade imbalance with China in on the same order as our energy imports for example.

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