so why is canadas money worth more than american money?

Question

wouldent that mean we are not the gratest nation on earth cause money is everything right

Answer 1

Indeed, we're poor fattys.

Answer 2

The value of one unit of currency does not imply relative strength of a nation of economy. It is just a currency denomination. The pound is twice the value of the dollar. Does this mean Britain is twice as powerful as the US? The Yen is hundreds of times less then a dollar. Does that make Japan hundreds of times less powerfull then the US?

Before the Euro, the Italian Lira was hundres of times less then the dollar. When they converted to the Euro, it was then about even to the dollar. Did italy just magically become more powerful of have stringer economy overnight?

You get my point. Its like measuing our currency in dollars or cents. Is the economy better if we measure out currency in dollars over cents? No. Its like saying i have twelve donuts or a dozen. So a pound for example is a larger denomination then a dollar. It represents more real resources, but there are less of them in circulation, just as if you counted donuts in dozens, you have less dozens then individual donuts.

However, currencied do change in relative value, and what is important is this relative change. It is true that the canadian dollar has agined on the Us dollar as of late. But these htings go up and down and in cycles, based on relative investment demand in that country, what goods and services are traded, relative interest rates in that country, and the rate at which the money supply is being changed and the corrispiodning inflation.

Right now canda's currency has appricated a lot primarily because of the global commodity boom, and canada is a major exporter of oil and mining products, so the demand for their currency has gone up. Their relative interest rates had also increased compared to the us, so foreign bond investors also wanted more cnadian dollars relative to us dollars. Yo have to keep in mind that a weakening us dollar does not neccessarily denote a weaker economy. It could mean the other country is getting stringer. It is the relative relationship taht is important, and these relationships fluctuate and go in cycles.

What you cant also do is falsely equate stong dollar = good. Its a trade off. A string currency makes imports cheaper but hurts exports. A weak currency helps exports but makes imports more expensive. The falling dollar has contributed to inflation as of late, but it has also madeout trade deficit smaller as exports have surged and imports have slowed down.

Answer 3

Because the US Federal Reserve (central bank) flooded the market with money to try to prop up the housing market and stock market so that the big banks wouldn't get hosed.

It's bringing inflation soon and currency traders know it, so they bid down the price they'll pay for the soon-to-be-crappy US dollar.

Answer 4

Ahaha, props to Derek, that was awesome