Has the Euro replaced the US Dollar as the preferred currency?
I also read in the NY OpEd section that if OPEC switched to dealing with Euros rather than Dollars, and if China sold off even a fraction of the trillian US dollars in American debt, the US economy would come near collapse.
I don't think it can be nearly that bad, but I'm sure if these things happened, the results would be catastrophic for American consumers.
I don't know a lot about Intl Economics, so if you know anything, can I please hear your imput?
Thanks in advance.
Answer:
It is not a big deal that some international transactions and prices are denominated in another currency besides dollars such as the Euro. It does not hurt or help the US.
A more interesting question is what would happen if China tried to sell its $1.2 trillion dollars of US government securities that it has accumulated. Remember that China accumulated this by undervaluing its currency so that it can sell more to the US than it buys from the US. In order to keep the Chinese currency undervalued, the government has to keep selling its own currency (yuan) and buying dollars which are then used to purchase US government securities.
One may wonder why the Chinese government wants to do this. Do Chinese consumers have so many shirts, shoes, tables, and TV sets that they want to sell the surplus in the US at cheap prices? As a US consumer, I can only thank them for their generosity.
In the end, the only thing the Chinese can do is to use its huge hoard of US securities is to buy US products. If they try to sell them for yuan, the price of the yuan goes up and US exports to China will increase and Chinese exports to the US will decline. If they sell the government securites and instead buy shares on the NY stock exchange or real estate in Los Angeles, nothing has really changed.
Don't worry about the prophets of doom who worry about what the Chinese might do. Just enjoy the low prices of Chinese products at Wal Mart and thank the poor worker slaving away in a Chinese factory for his generosity.
only in Iran
I don't think so... but you could always make a currency exchange
Good question! All I know is that the Euro isn't too much higher than the USD (U.S. dollar) man, I am going to star this question because it is so good. maybe If I just praise how good it is then no one will notice that I didn't even answer the question. Oh, I hope I didn't just say that out loud!! Oh, I just typed it.
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