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A strong dollar is one that has earned trust on an international scale. It reflects a reliable currency...at least, more reliable than that of othe...
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Finance: What is a strong dollar? 3 Views
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A strong dollar is one that has earned trust on an international scale. It reflects a reliable currency...at least, more reliable than that of other nations.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Econ
- Terms and Concepts / Forex
- Terms and Concepts / International
Transcript
- 00:00
Finance allah shmoop what is a strong dollar everything's relative
- 00:08
Like if you waved dollar bill at a hotel owner
- 00:11
in russia in the early nineteen nineties just after gorbachev
- 00:14
tore down that wall Well that dollar would have bought
- 00:17
you a whole night in the fanciest hotel in moscow
Full Transcript
- 00:20
hugely strong dollar relative to the russian ruble Back then
- 00:25
a dollar that took an average worker in the u
- 00:27
s like five minutes to earn Fought an entire night
- 00:31
at a swanky hotel in russia Why Well at the
- 00:34
time russia's entire political system was a shaky unstable Its
- 00:39
population didn't trust its own very soft currency Would it
- 00:43
be devalued like more less made worthless the next morning
- 00:46
by the government as it's issued a new currency Or
- 00:49
said that that when old ruble is now worth a
- 00:52
one thousand of a new russian ruble or with government
- 00:55
print a whole forest worth of just newpaper diluting the
- 00:59
value of any one unit of its own rubles could
- 01:02
happen has happened with other countries in the past by
- 01:04
brazil We're looking at you Could that happen in the
- 01:07
u s Well pretty much know least not in the
- 01:09
modern era people trust you ask currency which is like
- 01:13
saying that they trust the u s to not screw
- 01:16
over people who rely on its banking system in its
- 01:19
currency and that reliance and trust is worth a fortune
- 01:22
to this country because we attract the assets of foreigners
- 01:25
who feel safe giving our banks their money All right
- 01:28
well what does that trust actually do or mean to
- 01:31
us It makes for ah highly prized or strong u
- 01:35
s dollar meaning that people will pay a lot of
- 01:37
their own country's mistrusted currency in order to buy the
- 01:41
certainty or reliability of our own awesome currency And a
- 01:45
big part of this has to do with relative inflation
- 01:48
rates and relative interest in printing mohr paper by the
- 01:51
government like they're making bets that the inflation rate in
- 01:54
the u s will actually be responsibly controlled with various
- 01:58
monetary and fiscal policy Things that work versus the situation
- 02:02
in l say venezuela where the country is going bankrupt
- 02:05
under massive amounts of dead on their oil and they
- 02:08
have to print currency night and day just to pay
- 02:11
the bills people from starving yeah so people don't trust
- 02:14
venezuela like they do the us anyway This dynamic makes
- 02:17
u s goods relatively mohr expensive and foreign goods cheaper
- 02:22
in the u s Think about it like us goods
- 02:25
to be bought with russian rubles takes a whole lot
- 02:27
of rubles to buy us made chair where as us
- 02:31
dollars go very far in russia and a really nice
- 02:35
chair here with the massage thing all that three bucks
- 02:37
leased It wasn't nineties anyway And yes it also makes
- 02:40
it inexpensive for those holding highly prized u s dollars
- 02:43
to pay for hotel rooms in france when the euro
- 02:46
is weak against the dollar and of course somalia because
- 02:49
we always beat up on you somalia Sorry so yeah
- 02:52
at least for now the u s dollars pretty strong
- 02:54
Keep going with the russian metaphor It's rocky versus ivan 00:02:58.11 --> [endTime] drago strong
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