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Hello Everyone! Russia, Bush, tax cuts
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dan123
3465 posts
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 posted 3/22/2005 3:34:40 PM
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Oh now it is a different version - there was not enough dollars in Russia, so they denominated the ruble. That sounds more reasonable.
I do not know what happened in Russia in 1998, since I did not live there. But I did notice, that in that time gas price in the US went down to as low as 89 cents per gallon. May be that had something to do with their crisis.
About the $ floating around the world: First of all they will never get into the US, they are used as the world money, even in the countries, which hate the US. Second of all, if they will come back here and people start spending them, economy will start growing. So in any scenario US is benefiting from it.
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Serega13
Moderator
1389 posts
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posted 3/22/2005 4:30:01 PM
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Suppose everytime you try to buy something, a foreigner offers a little more, you offer even more in turn, etc, before you know it you will be buying a piece of gum for $50. Which means that effectively, your dollars became pretty worthless if you can't even buy some gum with them. This is a plausable scenario if a good number of US cash dollars currently located overseas are exchanged for other currencies in the world banks. All of a sudden there is a huge amount of dollars that banks outside of US are trying to get rid of and exhange for something made in US such as that pack of gum, but there's not enough of these US goods to go around even for US itself (look at 500 trillion deficit), let alone other countries, so economy gets screwed pretty badly. 
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dan123
3465 posts
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posted 3/22/2005 4:59:42 PM
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It does not work like that. People send money from the US to their relatives in Russia, and $50 make a difference for them (these are retired people). In the gum example, if this happens, a bunch of companies will start making gum and the price will go back down. Look what happened just before y2k - people started to buy canned food, water and prices went down. Companies and people started upgrading computers - buying new ones and the prices fell down.
Also many countries will not take usd from the people, they circulate alone with national currency and officially do not exist, it used to be like that in USSR.
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