@jpzhouutube Yes, but it would devalue their currency. Most countries don't want to do that (makes it hard for their people to buy fuel, food etc.). Also, this isn't a theory; it is what China has been doing to devalue their currency.
@LiveLifeWithLove2 жыл бұрын
Can you explain or make a full video .. why will someone buy Yuan if it is weak and sell US dollars to China ?
@tonyp28655 ай бұрын
They aren't buying now are they Gus?
@carlos1rrr11111 жыл бұрын
Hey i was wondering what website do u use to do this awesome stuff?
@leoneo13 жыл бұрын
@jpzhouutube yes, you are right partially. The devaluing of the Chinese Yuan also plays role. By the way, Kahn was a professional hedge-fond manager so I do believe he knows some what more about economy than you have picked up from couple of books written for amateurs.
@LiveLifeWithLove2 жыл бұрын
But how China buys US dollars who does exchange for weaker currency ? If Yuan is weak why will someone give US dollars for Chinese yuan if all trade is done in US dollars.
@musak.4068 Жыл бұрын
@@LiveLifeWithLove You're overthinking it and confusing yourself. That's simply how the world works currently. Take it for what it is
@stevenrogers53385 жыл бұрын
Yo yo went deep to find this video please make an update on the consequences of doing this trade. Thanks
@BroPaterno111 жыл бұрын
yeah they're called Post It Notes
@QuijanoPhD13 жыл бұрын
You have awesome mouse writing.
@sterrshow50163 жыл бұрын
He has a sketchpad
@mimosveta3 жыл бұрын
this was very good, is there a longer version going more in debt. I kind of lost you at some points there, with "cost of borrowing for us gov goes down", why? "financing debt" what does that mean, paying it off?
@musak.4068 Жыл бұрын
"more in depth"
@mr.weasel2552 Жыл бұрын
By “cost of borrowing for the US govt goes down”, they mean that because the US govt borrows by issuing T bonds, and the price of the bonds increases leading to lower interest rates, the cheaper interest rates make borrowing easier. For example, we give China a piece of paper saying “hey, if you give us money, we’ll pay it back with extra money over time, as a price for lending us the money”. The money we pay back over time is the interest, and the lower the rates, the lower the amount we need to pay back on our loan from China. In other words, money is cheaper when interest rates are lower. Therefore, the “cost of borrowing” (the interest paid on the amount borrowed) goes down. Financing debt on the other hand refers to how how the US government makes money off of debt. Bonds are debt obligations, meaning the government borrows money from private institutions, other governments, and individual investors while obliging that they will be paid back. Corporations also issue bonds. Bond prices and yields are determined by a mixture of risk(risk of default, meaning that the issuer won’t be able to pay back the bond, like if a company goes bankrupt) and interest rates. In the case of the US government issued bonds, because the US government and economy are so strong, the yields of these bonds are very low since there is non-existent risk. These are widely considered the safest investments. So to answer your question, the US government issued a piece of paper saying “give us your money and we’ll go off and spend it and do government stuff and eventually we’ll pay you back that money with a little on top”. Aka debt financing.
@AirLewis198813 жыл бұрын
does this mean that a country that is running a current account surplus must be running a financial account deficit
@murrowboy6 жыл бұрын
Khan, If China buys our bonds that means it'll keep interest rates low because there is more money. However they also buy US Dollars so that props up the dollar. Are you saying that China is giving us low interest rates and strong dollar at the same time? Don't low interest rates hurt the currencies?
@yabonyramsy55323 жыл бұрын
Thank
@musak.4068 Жыл бұрын
yes and no
@bluemagicuk11 жыл бұрын
0:00 what did i miss?
@tullorush9711 жыл бұрын
In currency markets does actual physical cash change hands or is it all digital?
@sterrshow50163 жыл бұрын
A mixture of both but mainly digital
@prodigiii71211 жыл бұрын
Khan Academy Please tell me what is the need for US to buy Chinese Yuan because they pay for Chinese exports with US dollars right?
@lindseyshaffer92335 жыл бұрын
Can Someone Please help me,... I am New at Investing in Stocks and Bonds and still trying to learn about everything,... Is it worth Investing in a Bank in China if the Price for stock is 0.71 here in America does it eventually Build anything worth my time how does that all work out does anyone know?... or has anyone tried it have any success?...
@mimosveta3 жыл бұрын
I also don't understand what these bonds are, how are they tied to debt itself. I understand that if you own them, you get money from time to time, and then lump sum after certain time expires... but what does that have to do with trillions of dollars of national debt..
@yearofthedawgs85812 жыл бұрын
From my understanding, a bond is pretty much a loan. When you "buy" a bond from a government, you are essentially lending them your money, which they compensate you with interest payments. Basically, buying bonds from the government means that you are technically putting them in debt. So according to this video, China's goal is to buy as many Tbonds possible in order to indebt the US government to itself
@jpzhouutube13 жыл бұрын
@daynvattah U implied china print too much money as this video. A T-bond to an American guaranty a return by term (fix income). Sold to Chinese named of “fix income” is non-sense. See now US asked Chinese to increase value of their currency, hence basically wrap out all guaranty return they invested. If I were them I will invest only under a term of fix exchange rate at a spot when bought (fix-income via fix-exchange rate). Well, this sounds easy, but China has no other safer place to put money
@LiveLifeWithLove2 жыл бұрын
But how China buys US dollars who does exchange for weaker currency ? If Yuan is weak why will someone give US dollars for Chinese yuan if all trade is done in US dollars.
@redle198813 жыл бұрын
what happens to the Yuans bought by selling the U.S. dollars at first place? Does the U.S. govt has them?
@simplyfacts12311 ай бұрын
Aid.
@jpzhouutube13 жыл бұрын
@daynvattah I know he is.. this is why I commented on. I do not usually comment on others. As I said this video gave a false impression that suggeted China's wealth was stocked by Gov mainly playing devalue of currency. We know this is NOT true. For over 30yrs, millions of chinese factory workers' hard working to make peny by peny (e.g Wal-Mart, K-mart, etc) to accumulate today's china wealth and then invested back to US......
@tazdevil11213 жыл бұрын
can a country lie about their money supply? how do other countries know that a certain country's economy has gone down due to printing more money?
@cjw66592 жыл бұрын
I think printing endless supply of money is sort of lying anyway.
@jpzhouutube13 жыл бұрын
A false impression u gave. Suggest you go back to 101 economics and learn capital efficient market theory and learn a little about “Global economy”. The inefficient in the global markets between US and China/Japan is directly related to the human resources. Both China and Japan have an edge against US ---China has far lower labor cost (hence high manufacture productivity) and Japan has higher-tech edged efficient manufacture. Those are true cause of winning in the global markets.
@jpzhouutube13 жыл бұрын
BS, according to your theory, any country can buy US bonds by just print own money. LOL.
@jpzhouutube13 жыл бұрын
@khanacademy If so, any country can be rich by devaluing its currency! False impression you gave! Truth are..Say, product A can be made by both China and US. Chinese labor= $1/hr and American labor=20/hr. So chine wins. Now,say product B can only be produced in US (US wins). If demand A = demand B ($ wises),then trade balanced. When Chinese labor cost will be at $20/hr? until China GDP/capital close to US (equribrium)