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If the US retail business industry accepted Euro dollars, would that help boost the economy?
By Rose | February 17, 2008
Jimmy L asked:
As we see that the weak dollar is falling in the slumping US economy, and Euro dollars are rising. If US businesses accepted the strong value of the Euro dollars from tourists (currently the US industry does not), would that help boost the US economy? or at least keep it from going into recession?
As we see that the weak dollar is falling in the slumping US economy, and Euro dollars are rising. If US businesses accepted the strong value of the Euro dollars from tourists (currently the US industry does not), would that help boost the US economy? or at least keep it from going into recession?
What are the adverse/positive macroeconomic effects of accepting Euro’s in the US?
Scott
Topics: US Economy | 5 Comments »
February 18th, 2008 at 2:46 pm
Canadian money is regularly accepted in the United States as currency and vice versa. Because the number of European travellers in specific areas are small, compared to the number of Canadians along the northern border, it is likely that converting to a system where Euros were also accepted would generate costs for businesses that were unnecessary. As there is no shortage of money changing locations and as the dollar and euro are equivalents at any given moment, though over time one may rise or fall, accepting one over the other would only be of symbolic value unless your supplier was paid in euros, such as the purchaser of Italian shoes.
There would be a slightly adverse affect for most firms reducing the well being of the US.
February 21st, 2008 at 9:44 am
I’ll leave macroeconomics to others, but do understand that any business could accept euros now, should they choose. However, keeping track of the exchange rate and exchanging the money at a bank would be a pain, which is probably why few do it. I do know from experience that if you buy with US dollars instead of pesos in Mexico you’ll pay extra- occasionally as high as 25%.
February 23rd, 2008 at 7:49 pm
It doesn’t matter what currency is used. It all gets converted into US dollars at the time of the sale. The reason you would pay more for using US dollars in Mexico is because they think you are a rich American on holiday.
February 25th, 2008 at 12:29 am
For those who aren’t aware of the fact, many retail stores will accept euros. They can exchange them for dollars at most banks. A recent story on NPR about european travelers cashing in on the weak dollar made this public knowledge. One gift shop owner in NYC put out a sign “EUROS ONLY”. This quickly netted him about 1500eu or US$1000.
Pardon me while I digress for a moment:
Before Bush was elected, the Euro was only worth 87 cents – I know this because I arranged webhosting for a peace group and found my best deal in Belgium thanks to the exchange rate – I locked in a long term contract. It wasn’t long before the rates were inverted, and now the Euro is worth US$1.50.
Oh, your question was, would this help boost the economy – the economy is like a pendulum – when there exists an imbalance, people will take advantage of it until demand pushes the pendulum in the opposite direction. This time however, the rising and unmetered supply of US dollars overseas may eventually cost the US much more than most people suspect. This is because the Federal Reserve stopped reporting the total money supply in November, 2006 while beginning to print an unprecendented quantity for distribution by banks overseas. It was announced with 2 lines in the Federal Register. Do a Google on M3, and you will find the voices in the wilderness crying out about the imminent doom of the dollar. The EU has been tracking its equivalent of the now defunct M3 by tallying international bank transfers, thus the rise in value of the euro.
This proves that money supply does make a difference, quite contrary to what we have been told by dark forces within the banking industry – forces that include “Family Firm” of the current US president – Brown Brothers Harriman – and the owners of the privately held Federal Reserve System. Brown is the same Brown as “Kellogg Brown, and Root”, and Harriman was the partner of Prescott Bush, son of Sam (Merchant of Death) Bush.
So your answer is – the Euro is already accepted to the extent that it would matter, and this fact is already making as much difference as it ever will.
February 25th, 2008 at 2:02 am
The US’ companies when make transaction out of US usually accept Euros and many companies has Euros like liquid assets. US’ companies does not sell its goods in Euros into US because the people only have USD for pay, all have not Euros.
If we suppose the government establish the Euro like the currency of US, then the government will lose its faculty to make monetary policy and the monetary markets will be down the supply and demand rules. For US is too risky to let the control of monetary markets because usually government attack the confidence crisis by measures in monetary markets.
Maybe an agreement between Europe and US for let to this to impress some Euros could attenuate the out of control.
If the government decide to make this agreement then the announce must occur suddenly because the expectations could depreciate quickly the value of USD.