| RE:Good Morning..... |
Subject: RE:Good Morning..... by DaleD on 2008/2/27 15:28:34 That's not a stupid question. As I understand it, the way to strengthen a currency is to raise interest rates your banks will pay those who hold your currency. If I can only get 3% on the dollars I hold, but 5% on the euros, it's a no brainer. Well, since the euro pays more, more want it, supply and demand. But with the housing crisis, our government is trying to keep rates low to enable people to refinance and not leave banks with a glut of houses. And low rates keeps Wall Street pacified so the market doesn't tank. If I can get 5% at the bank, it starts to look good compared to this volitile market. Also, if you raise rates, it hurts exports. If you strengthen the dollar, then our goods cost more in other countries. Keeping rates low, fuels inflation. Lots of currency available for a low price, makes the dollar weak, or cheap. Takes more dollars to buy something, and it gets into a cycle. Another thing that gums up the works is the Chinese don't float their currency. I'm not positive, but I think it's tied to the dollar. Therefore, the exchange rate of yuan to dollar is always the same. That's a problem for import/exports and trade agreements. One thing that won't help is raising taxes and taking money out of the hands of people and giving it to an extremely inefficient and corrupt government. Universal healthcare is a great idea on the surface, but ask yourself: When has the government setup a program that was efficient? When has the government done something better than the private sector? And do you really want politicians bellying up to a trough of money that would be second only to defense in total dollars spent? Sorry for the rant in the reply. |
