CB, you should care about the exchange rate because you, meaning people in the USA, buy things from other countries. When one's currency is going down the gurgler, that means one can't go shopping as much as one has been accustomed to.
People like shopping and sometimes, even frequently, they like to get more for their money than they do. They even sometimes ask for discounts. Not many are indifferent to how much they pay for something.
To use an extreme example, if one's currency goes to zero, it means one can't buy anything at all from other countries. If the USA was self-contained, like Earth is, not needing to trade with any other planet, then the USA wouldn't be affected by how many US$ people in other countries would want for their currencies. Other countries could use US$ as their own currency without the USA buying or selling anything at all from them and the exchange rate would be irrelevant to life in the USA.
In fact, the USA buys a LOT of stuff from other countries. The USA also sells a LOT of stuff to other countries. For example, I own some American companies and we sell CDMA cyberphone technology to China, Japn, Korea, New Zealand, Australia and everywhere else. We sell Globalstar minutes and Globalstar phones to people in most other countries around the world.
My American companies also buy a lot of stuff from other countries. In May for example, I'm going to buy a launch by a Russian company of another 4 Globalstar satellites which are going to fly around and around Earth delivering 0s and 1s to people all over the place, a lot of whom are in the USA.
I hire Americans to do these things for me because the USA does a pretty good job of protecting my assets, though they are not doing an excellent job of it, with Nokia right now stealing a whole stack of intellectual property = I am going to have to get King George II, Hillary, Barack, Nancy, some judges, bailiffs, customs officers, police, Predator drones and Norad to gear up to enforce QUALCOMM's property rights against Nokia.
I pay a LOT of tax to the USA, to the tune of some $2 billion a year, and that doesn't count the tax on employee salaries, supplier profits. That's significant money, even for USA standards. Other companies also depend on their intellectual property being protected, so there are umpty $billions at stake.
Right now, there is a revamping of patent law under way.
A peculiar idea people have is that trade should be balanced with each country. They get themselves in a lather over the balance of trade with China for example. They think that China should buy a lot of stuff from the USA because the USA is buying a lot of stuff from China. They huff and puff about the exchange rate with China, getting all angry because they stupidly think the yuan should be more expensive so that USA exporters can sell to China.
Trade between individual countries doesn't need to be balanced. Even if China bought ZERO from the USA, it wouldn't matter. The reason is that there are other countries. USA buys stuff from China, China uses those US$ to buy oil from Saudi Arabia, Saudi Arabia uses those $ to buy military equipment, Boeings and stuff from the USA, and trips to Las Vegas and Disneyland. The USA buys more stuff from China. And so on.
Mqurice |
