Why are both the British pound and the euro worth more than the US dollar?

Question

We have the biggest economy in the world. Why doesn't our currency have the value?

Answer 1

Because of the enormous amount of debt we have (the deficit). What is the deficit? It is us borrowing money from other countries to pay for stuff that the government is wasting money on. Think of it as a credit card with no cap on it. The greater in debt we become (the more obligated to others to pay down debt) the weaker our currency becomes.

Answer 2

This is a very good question. I am not an economist either, but here are a couple of things that the U S might do to increase the value of the dollar (keep in mind that the U S actually wants the dollar to keep falling). A rise in interest rates would streigthen the dollar. A drop in the trade deficit would strighthen the dollar. A drop in the budget deficit would streighten the dollar. The latter two are not likely to happen any time soon. U S wins the war in Iraq. Again somewhat unlikely in the near future. Price of oil drops to $35.00 a barrel. Not too likely either. On the U K side, the U K announcing they would increase forces in Iraq would likely drop the pound. U K cuts interest rates. A major terrorist attack on the U K. A collapse of the chunnel.

Answer 3

Um, actually, we've been borrowing from Japan or China, whichever, for quite some time now. we're in debt up to our eye balls. The Dollar is starting to lose it's value because other up and coming nations want their crack at the economy so their switching to the euro standard, which in turn will give the U.S. dollar less value. I don't think it will hurt us because they will be exporting from us this time because it would be cheaper to do so.

we can't be on top forever!!!

Oh, and you can thank Bush for appropriating, what was it, 80 Billion dollars into that money pit he calls a war!!!!!!!

Answer 4

They are merely arbitrary unitary measurements of value, that's all.

You could start afresh tomorrow with every 10 dollars today being worth 1 dollar tomorrow.

That would mean every pound today (worth 2 dollars) would be worth 20 cents tomorrow.

Look at general comparative costs/wages between USA/UK and you'll understand.

It's swings and roundabouts anyway - the cheaper it is for a country to buy (import), the more expensive it is for that country to sell (export).

Answer 5

It's a market and the rates will vary. The British Pound maintains a level of greater value - the Euro does not. There are political factors, economic factors .. current events. Supply and demand!
http://en.wikipedia.org/wiki/Money_supply
http://www.gocurrency.com/forex-news/?cat=12
http://www.populistamerica.com/dollar_s_skid_puts_a_glow_on_the_euro
http://finance.google.com/finance?cid=8460793&morenews=10&rating=1&newsbefore=2007-04-21
http://www.nbs.sk/MP/MS0701/MS_06_2.HTM
http://en.wikipedia.org/wiki/Foreign_exchange_market

Answer 6

They are not worth more or less. You are looking at exchange rates which have no meaning. You have to look at prices. What does a Big Mac cost in Europe compared to the US?

One pound may be worth more but you work twice as long to earn it.

Answer 7

Because we have the biggest debts in the world to go with that.

Answer 8

Because its more expensive in Europe. Gas is $7 a galon.
Can't wait till we're at $4 this summer.

Answer 9

America has more trade deficit than Europe and many other places.

Answer 10

We might have the biggest economy, but guess who owns all the banks?