Why is a country's savings rate directly related to the value of its currency?
Most Commented Posts
- August 8, 2008 -- Should "In God We Trust" Remain On American Currency? (41)
- February 26, 2009 -- Xtian: What right (specifically) would be violated by removing "In God We Trust" from US currency? (41)
- January 27, 2010 -- Do conservatives invest in gold because they have no faith in American currency? (37)
- November 24, 2008 -- Is “In God We Trust” on US currency a true statement? (35)
- January 3, 2009 -- Should the motto “In God We Trust” be removed from U.S. currency? ? (34)
- March 17, 2009 -- R&S what do you feel about "One nation under God" on US currency? (34)
- April 21, 2009 -- What would be the impact on American society if "In God We Trust" were removed from the currency? (34)
- May 7, 2008 -- Who else thinks that "in god we trust" should be removed from US currency? (33)
- January 9, 2009 -- Are coins and currency the same thing? (30)
- March 8, 2010 -- If your good looks were currency, what could you buy? (30)
This entry was posted on Thursday, July 24th, 2008 at 8:05 am and is filed under Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
July 24th, 2008 at 8:05 am
The more money a country's citizens save, the less of that money is available for other uses, leading to scarcity and an increased currency value.
The US has an extremely low (some say negative) savings rate, cash is generally in abundance (until recently) and the currency becomes devalued.
July 24th, 2008 at 8:05 am
The banks can borrow against savings' account, but if the savings are low, they need to borrow the currency from countries that have saved the money instead.
July 24th, 2008 at 8:05 am
What you have to understand is that a nation's currency reflects the overall economic health of that country. So when people are able to save more, it's taken as a sign they're doing well and not suffering.
In addition, banks will take that money you put into your account and use it to make loans. This is a basic concept that's covered in money and banking classes. Banks lend to one another and create money by making loans. Increased deposits by citizens means the banks will have more to lend out.