Currency Effect on Trade

Currency Effect on Trade

[khanacademy]

@norwayte You would then have to have one global monetary policy which is tough since every nation would be experiencing different levels of growth, inflation, debt, unemployment etc. The EU is already facing this problem: Germany's situation is very different than Greece's but they have to have the same monetary policy. It would be even more extreme on a global basis.

[aaaaa]

The comments section is loaded with idiots...he is explaining this as if you’ve never heard it before...he’s doing this in real time...it’s not rehearsed....watch his videos and you will start to see why he is so effective . Too many teachers speak with students assumed knowledge . Sal is doing fantastic

[ojd]

Great explanation on how one country's currency weakens or vice versa. Terrific example!

[anonymous-tcmw]

simply put, the more u export, the higher ur currency in value becomes

[khanacademy]

@noxure That's true, although the economic difference between even the poorest US state and, say, Zimbabwe or Afghanistan is FAR bigger than the difference between, say, West Virginia or Mississippi and Connecticut. There is definitely a large wealth disparity between rural and urban China, but the fiscal situation is the same (same central governemtn). The main point, however, is that if you really want one currency, you need one monetary policy which really means one government.

[khanacademy]

@noxure I'll add that the Europeans are facing difficulties because some governments like Greece have run up so much debt that they are insolvent while others are much more responsible. Very difficult to address the needs of Germany at the same time as Greece (especially when there isn't a consistent fiscal policy).

[stephenamaral]

Easy to overthink this. Keep it simple guys.

[Jotto]

I'm getting into Forex, currently practicing on a demo account, and whenever I reach a target profit on that, I'll be starting with small amounts of real money, and I'll see how it goes.

Thank you very much for these videos, very helpful.

[rome]

This explanation was soo good. Khan is undefeated

You're right, but since the US would also pay China in Yuan (Not dollars) that transaction would have gone the other way around too. Your reasoning is probably correct, but the way he explains it makes it easier to understand and reaches the same basic conclusion (in a mathematic and economic way)

[warrenlaurde]

@khanacademy There HAS been a global monetary policy for the past 50 years: USD enforced by IMF/WB debt slavery, backed by control of ME oil by the MIC (the only real asset anyway). It's ending, panem et circenses notwithstanding. But that's another vid :-D

GREAT job explaining an abstruse topic!

[theHDLify]

Does this mean that if a particular country has more exports than imports its currency becomes stronger?

[meanmanturbo]

So, any input on export based economies wanting to keep exchange rates of their currencies low? China artificially keeping the exchange rate low springs to mind. Great video as always!

[advers]

@khanacademy all though i agree with your statements, one world currency doesn't necessary require one government it just requires one policy maker, in the case of Europe for example the EU makes polices for all nations which has to be accepted by members of the EU, however, the nation itself is self governing in the sense that areas in which the EU can make policies are limited by the interest of members rather then individual national interest,

[noxure]

@khanacademy But two different states in the US can also have vastly different economic situations (ie, north and south) and there is an even more enormous gap between rural China and metropolises like Beijing or Shanghai. Yet, the US dollar and the Yuan are both considered as strong currencies.

[negochristian]

You guys rly think Khan has time to answer all your questions ? xD Guys above are lucky, in a few years they will be able to say that they got their questions answered by Khan...It will be like now someone saying Bill Gates used to reply their messages.

Thumb Khan up towards the Nobel Prize !

[FoodTech]

In reality, does the China pay the US in Yuan? My intuition told me they would change their Yuan into US dollar and pay the US. If my thought was true, there would be more demand for the US dollars and things would have gone the other way around. I am really bad at Econ and Math, so sorry if I'm wrong. :P

[ivandate]

can you build such trade model goes if currency was decided fix all the time ?? what disaster will come?

[norwayte]

@khanacademy ... Right, Sal, problem area: differences (growth, debt, ...) And now? That's it? "Curing/Healing" own, self-made problems (...USA) for instance with currency "wars"?! As seen in the past? Outsource and/or prolongate own problems to other nations on their backs...and one favorite way to do it is currency-juggling? And other nations alike...
One missing thing with the Euro: a really combined general policy.
Keep on going...maybe we all get some ideas while watching your videos.

[blevins]

Except China has pegged ¥ to the $. They manipulate the value of the ¥ by adding more to the market.