Quote:
Originally Posted by ChazInMT
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.
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The Foreign currency they give you in exchange for the US currency you give them ... that foreign currency was not free ... anymore than US currency is free for a similar bank in the other country to give out in exchange for that other countries currency.
US Currency has value ... Foreign currency has value ... you walk in with x value ... you exchange that form to another form ... and walk out with x(-fees) value in a different form... you did not loose all the value of the US Currency you exchanged.
Quote:
Originally Posted by ChazInMT
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.
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You are still missing the currency exchange concept ... and you are incorrectly assuming a perfectly balanced trade ( as if magically there were always a zero trade deficit )
The value of a US$ does not stay as cash ... All Currency has a value ... that value is exchanged for a equal value ( minus fees ) of a different currency.
That exchanged value ... does not have to come back to the US... it only comes back when there is a true zero trade deficit ... and a complete even balance from import value to export value ... that perfect balanced trade assumption you are making does not exist in the real world.
Quote:
Originally Posted by ChazInMT
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.
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I agree there are domestic jobs as part of the equation ... but that is a separate issue from what I am disagreeing with you about.
Quote:
Originally Posted by ChazInMT
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.
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I don't have a problem with the Saudis having stuff.
I'm disagreeing with you about a different issue than that.
Quote:
Originally Posted by ChazInMT
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.
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I agree we do get lots back ... that's why we do it ... I have no disagreement with that concept.
Quote:
Originally Posted by ChazInMT
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.
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If you actually want to look at the big picture ... that is were the transfer of wealth issue becomes important.
Quote:
Originally Posted by ChazInMT
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.
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Look up:
Currency exchange ... or currency exchange rates ... or trade deficit.
Any of those clearly violates and directly disagree with the concept you described.
Currency Exchange ... and the exchange rate ... violates your idea of it staying US dollars ... because it doesn't... the value can be exchanged into a different non-US Dollar form.
The Trade Deficit which does exist ... violates you idea of they have to buy our stuff with the money we spend buying their stuff.
You aren't the only person to have taken economics classes ... and you are not the professor of that class ... and even if you were ... the point I have been disagreeing with you about ... you are still wrong about ... and would still be wrong about even if you were that professor yourself ... like it or not trade deficits do exist ... what you described "who then must buy something from the US." ... is just not correct.
Quote:
Originally Posted by ChazInMT
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.
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You're still not understanding the concept of currency exchange rates... and incorrectly assuming zero trade deficit.
US Dollars have value anywhere in the world that there is an agreed value for the currency exchange rate... not just the US as you claim.
The Value of the US dollar can be exchanged for a value in a different currency.
Further ... the exchanged US dollar does not have to be spent in the US for something ... it never has to be spent in the US for it to have value in that other country.
Even if we wanted to forget for a moment the currency exchange and the trade deficit issues ... your claim of "US dollars are only good in the US" is still incorrect on it's own ... US dollars are good in Canada ( I've used them there. ) , and I know people who have used US dollars to buy stuff in Japan.
As long as the merchant recognizes the value of the currency ... it doesn't matter what country I am in ... that US dollar is still good... not because of the printed dollar ... but because of the recognized value ( which is related to the currency exchange rate ).