How does the whole currency system work? Is new money made to compensate for the money that is now overseas? Does China just give it back, or do they eventually just own the USA? I am having a bit of trouble trying to understand how that whole process is supossed to work.
2006-11-01 17:14:07 · 3 answers · asked by samon 1 in Social Science ➔ Economics
Money comes out of thin air my friend. Countries borrow money from each other like you borrow from the bank. But the payback terms are little different.
2006-11-01 17:22:31 · answer #1 · answered by Viakin 2 · 0⤊ 0⤋
Yes, in fact the money goes straight to China. It's one of the reasons people worry that the USA is not the preimenant superpower; the USA might be on the decline and China might be on the rise.
2006-11-02 01:24:17 · answer #2 · answered by adphllps 5 · 0⤊ 0⤋
The U.S. might buy a bunch of stuff from China but they buy all their raw material from us. That is just how the system keeps itself afloat.
2006-11-02 01:24:00 · answer #3 · answered by Smiley 2 · 0⤊ 0⤋