Quote:
Originally Posted by ChazInMT
So what's an Arab supposed to do with the US$ cash? Spend it in America.
|
Currency exchange ... Cash money is interchangeable ... it's credit is worth ___ of a different kind of currency ... so if you buy $5 Billion US worth of oil from country X , that has a 'credit' value of ___ in that other country X's currency ... which they keep and spend in their own country.
The general concept of they spend it in US ... would only hold true if the total value exported to a country is equal to the total value imported from the same place... that doesn't happen either ... it's called a trade deficit.
When the trade deficit goes + or - ... one country is transferring it's wealth to the other... poor country gets richer ... rich country gets poorer... etc.
As the relative richness and poorness of the countries change ... the exchange rate for the credit value of the currency changes.