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Originally Posted by Dollarmansteve
eco101: I said current account deficit, not budget deficit. The current account deficit is the result of an imbalance in trade, and the US is a net debtor to the rest of the world primarily because, in the simplest of layman's terms, they import a fuck of a lot more than they export.
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Catchup class for ECO101 :
Since the US import more than export, as the dollar falls:
- Import cost more ( example: wood from canada 1.00 Can = cost before 0.55 US, now 0.85 US )
- Export brings in the same 1.00 , but cost less to foreigners ....
A low currency is good for an exporting country.
