Why is the american dollar value so low ?
The answer is largely wrapped up in real interest rates. U.S. interest rates are low compared with Europe and England – the more interest you receive for your money, the more value it has. The value of the dollar has very little to do with debt except to the extent that the national debt has a small and insignificant influence on interest rates. Think of it this way: If U.S. interest rates were to jump from 5.5% to 16% overnight, the dollar and Euro would reverse and the dollar would be the currency in demand and currency traders would be buying the dollar and selling the Euro all around the globe. It’s not correct to say that a currency is stronger. Currencies have value based on purchasing power and intrinsic value. For instance: It would not matter much if the Japanese Yen were “stronger” than the dollar but it still took the Yen an equivilant of $5 U.S. dollars to buy a cup of coffee or $20 to buy a gallon of gas. That is purchasing power. The intrinsic element of currency is how m
