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How does the economy work and how does our economy (US) effect foreign economies?
By Rose | October 7, 2008
shootandkillmexx asked:
As the title says. In the simplest form, how does the US economy work.
Also, how does our economy effect foreign economies? (How does out financial crash cause other economies to follow suit?)
Dwight
As the title says. In the simplest form, how does the US economy work.
Also, how does our economy effect foreign economies? (How does out financial crash cause other economies to follow suit?)
Dwight
Topics: US Economy | 3 Comments »
October 7th, 2008 at 6:36 am
your question is a complex one which makes it difficult to answer simply. so, let me try highlighting 3 simple examples instead.
1. US is a major trading partner to many countries. Countries who export to US may now find themselves not getting payments because the banks who act as intermediaries for payments are bankrupt. when US goes into recession, the US will import less and therefore affect countries who depends heavily on exports to the US.
2. the greenback is one of the major trading currencies in the world. many countries hold US dollars in their reserves. if the US economy plummets, the US dollar may devalue, it affects countries holding onto large amounts of US dollars.
3. in banking operations, banks lend or borrow money to/from one another when needed. the high profile crashes in the US affected sentiments around the world and banks are more cautious about lending to other banks. this is causing a credit crunch in the financial system that can be destabilising.
October 7th, 2008 at 11:51 pm
We build things and then sell them. The buyer uses the things but when they break , she hires someone to fix it. That person gets paid and uses the money to buy food for his family. The seller of the food uses his money to buy more food to sell. And this goes on and on. It is our economy..
October 10th, 2008 at 6:31 am
normally I would answer this question differently; however, my answer will reflect the reason for our devastated economy and for the booming economy in China! the answer is former President Bill Clinton!
without a single vote from congress and with the single stroke of a pen… the “democrat” agreed to a free trade agreement with China!
virtually immediately, the Walmarts (and every other retailer) filled the sales floor with items: “made in china”,
if you don’t believe me just go shopping and try to find a pair of shoes (or anything else) that’s not “made in china”!
as a result of this “free trade agreement” material goods came flooding into the US from China by the boatload!
importers loved it; because, they could now buy shoes for $2 a pair and sell them for $20! in an economy where retailers were glad to double their money… now they could make a 1000% profit! so, China’s economy booms!
don’t get me wrong… most of the chinese workers are still getting paid very little for their efforts! But, the economy is thriving because of the sheer volume of products being manufactured to export to the US!
the result of this: no need to manufacture goods in the US! the elimination of millions of jobs! the value of stock in American companies plummets, the stock market crashes and the economy is devastated! and, Obama blames Bush and McCain for THIS!!!