Quote:
Originally Posted by IamIan
Currency exchange ... Cash money is interchangeable ... it's credit is worth ___ of a different kind of currency ... so if you buy $5 Billion US worth of oil from country X , that has a 'credit' value of ___ in that other country X's currency ... which they keep and spend in their own country.
The general concept of they spend it in US ... would only hold true if the total value exported to a country is equal to the total value imported from the same place... that doesn't happen either ... it's called a trade deficit.
When the trade deficit goes + or - ... one country is transferring it's wealth to the other... poor country gets richer ... rich country gets poorer... etc.
As the relative richness and poorness of the countries change ... the exchange rate for the credit value of the currency changes.
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Nice try. If the banker gets the US$ in exchange for the Saudi Riyal, then the Banker has the US$ and he's the one who comes over and buys half of Corn City Nebraska.
Yes, Saudi's do get richer in the sense that they own lots of US stuff, they have to buy their stuff from the US, or give their US$ to someone else, who then must buy something from the US.
Also, don't forget, when the US oil companies make something like gasoline, motor oil, diesel, or tar out of the crude oil they import, they sell this and get money for it....a lot of money, enough to support many jobs and they provide these products to us. So the US citizens get a lot out of the trade as well, and on it goes.
So essentially, at the end of the day, the Saudis just have more stuff. If this is upsetting to you that Saudis have stuff, that's your problem. Maybe you should figure out something the Saudis want to buy and sell it to them, then you'll have the money, and you can buy some stuff. This is my main point.
I brought up my point because it sounded as if people were upset that we just send $5 billion overseas and a) the money never comes back, b) the statement does not recognize that we get a HUGE benefit out of having the oil to run through our refineries here in the US.
People should keep in mind how things work in the big picture. The points you write about above are small details that do not form a complete picture of what goes on, you discuss an exchange rate, then you say essentially what I do, the Saudis have more stuff, are richer.
I learned what I'm writing in college economics at Western Michigan, now if my professor was wrong, or I got the A in the class and somehow misunderstood it, then by all means, show me where I went wrong.
If you fail to understand the fundamental concept that US dollars are only good in the US, then there really isn't any further point in trying to discuss this. It would be like someone failing to understand that they can't breathe water and you are trying to rationalize why they aren't able to live underwater for a few days and hang out with squid or something.
Oh, and FWIW, I looked into the big picture of what the US imports in oil, and it is more like $7 Billion per week from everywhere, 40% comes from Opec nations so we give them $2.8 Billion/week. For any single country, we get the most out of Canada at $1.7 Billion/week, that's a serious amount of jelly donuts eh? Saudis export $800 million/week to the US. All our oil imports are equal to 1.7% of the Total GDP here in the US.
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