<p>There is another factor.</p>

<p>A lot of people outside of the US, consider that paper US money to be a lot safer method of storing wealth then what their governments promote.   Therefore a lot of US money is kept under the bed and never spent.</p>

<p>This has the effect of allowing the US to print money without increasing the money supply, e.g. to borrow lots of money at 0% interest.</p>

<p>If the value of USD every goes down a lot, would these people still want to keep it under their beds?  </p>

CC BY-SA 3.0
2014-12-31T10:03:43.570Z
2014-12-31T10:03:43.570Z
Ian Ringrose
<p>When the USD is highly valued, it allows people from the home country, the United States in this case, to purchase goods relatively cheaply from abroad and put pressure on domestic firms to have low prices. From a consumption standpoint, this may be advantageous.</p>

<p>A high value USD may also make goods from the United States more expensive relative to goods from other countries, so the quantity demanded of U.S. goods abroad decreases. </p>

<p>Thus, the high value USD may increase the quantity demanded of foreign goods domestically and reduce the quantity demanded of U.S. produced goods abroad. Together, this <em>can</em>, but not necessarily, have long term consequences on the current account if imports are greater than exports over the long term.</p>

<p>The weak Chinese yuan renminbi allows China to export many goods cheaply and, thus, accumulate a positive current account and become richer relative to the rest of the world. In fact, China's monetary policy has been subject to criticism in the past for actively managing the renminbi's value.</p>

CC BY-SA 3.0
2014-12-09T22:59:28.703Z
2014-12-09T22:59:28.703Z
rcc_econ
<p>What is the advantage and disadvantage to have a high value of USD for USA?</p>

<p>China and Japan always want to keep their currency low as oppose to USA.</p>

CC BY-SA 3.0
2014-12-10T03:05:06.917Z
I asked the same question here, not sure if this is a strict duplicate though http://economics.stackexchange.com/questions/80/currency-values-developing-economies-and-balance-of-trade
skv
<microeconomics><monetary-policy><money-supply><supply-and-demand><currency>
What is the advantage and disadvantage to have a high value of USD for USA?
Victor
# What is the advantage and disadvantage to have a high value of USD for USA?

(Asked by: username_0 on 2014-12-09)

What is the advantage and disadvantage to have a high value of USD for USA?

China and Japan always want to keep their currency low as oppose to USA.

**Tags:** microeconomics, monetary-policy, money-supply, supply-and-demand, currency

> **Comments:**
> **username_1**: I asked the same question here, not sure if this is a strict duplicate though http://economics.stackexchange.com/questions/80/currency-values-developing-economies-and-balance-of-trade  

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## 2 answers

### Answer by username_3 on 2014-12-09. Score: 7 | Accepted answer

When the USD is highly valued, it allows people from the home country, the United States in this case, to purchase goods relatively cheaply from abroad and put pressure on domestic firms to have low prices. From a consumption standpoint, this may be advantageous.

A high value USD may also make goods from the United States more expensive relative to goods from other countries, so the quantity demanded of U.S. goods abroad decreases.

Thus, the high value USD may increase the quantity demanded of foreign goods domestically and reduce the quantity demanded of U.S. produced goods abroad. Together, this *can*, but not necessarily, have long term consequences on the current account if imports are greater than exports over the long term.

The weak Chinese yuan renminbi allows China to export many goods cheaply and, thus, accumulate a positive current account and become richer relative to the rest of the world. In fact, China's monetary policy has been subject to criticism in the past for actively managing the renminbi's value.


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### Answer by username_2 on 2014-12-31. Score: 3

There is another factor.

A lot of people outside of the US, consider that paper US money to be a lot safer method of storing wealth then what their governments promote. Therefore a lot of US money is kept under the bed and never spent.

This has the effect of allowing the US to print money without increasing the money supply, e.g. to borrow lots of money at 0% interest.

If the value of USD every goes down a lot, would these people still want to keep it under their beds?


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