Currency Effect on Trade

[@ojd3708]

Great explanation on how one country's currency weakens or vice versa. Terrific example!

[@aaaaa8744]

The comments section is loaded with idiots...he is explaining this as if you’ve never heard it before...he’s doing this in real time...it’s not rehearsed....watch his videos and you will start to see why he is so effective . Too many teachers speak with students assumed knowledge . Sal is doing fantastic

[@paulg451]

As a teacher I think he's brilliant. He could teach exchange rates to a teen year old and they'd get it. Fantastic channel

[@musak.4068]

Absolutely!

[@anonymous-tc3mw]

simply put, the more u export, the higher ur currency in value becomes

[@khanacademy]

@norwayte You would then have to have one global monetary policy which is tough since every nation would be experiencing different levels of growth, inflation, debt, unemployment etc. The EU is already facing this problem: Germany's situation is very different than Greece's but they have to have the same monetary policy. It would be even more extreme on a global basis.

[@rome6872]

This explanation was soo good. Khan is undefeated

[@khanacademy]

@noxure I'll add that the Europeans are facing difficulties because some governments like Greece have run up so much debt that they are insolvent while others are much more responsible. Very difficult to address the needs of Germany at the same time as Greece (especially when there isn't a consistent fiscal policy).

[@warrenlaurde]

@khanacademy There HAS been a global monetary policy for the past 50 years: USD enforced by IMF/WB debt slavery, backed by control of ME oil by the MIC (the only real asset anyway). It's ending, panem et circenses notwithstanding. But that's another vid :-D GREAT job explaining an abstruse topic!

[@Jotto999]

I'm getting into Forex, currently practicing on a demo account, and whenever I reach a target profit on that, I'll be starting with small amounts of real money, and I'll see how it goes. Thank you very much for these videos, very helpful.

[@fredericp64]

10 years later. How's the trading going?

[@ghouse5443]

Any updates

[@Jotto999]

@@ghouse5443 Just hold an index fund, you'll make FAR more than speculating on forex, or practically anything else, and for almost no effort.

You're right, but since the US would also pay China in Yuan (Not dollars) that transaction would have gone the other way around too. Your reasoning is probably correct, but the way he explains it makes it easier to understand and reaches the same basic conclusion (in a mathematic and economic way)

[@khanacademy]

@noxure That's true, although the economic difference between even the poorest US state and, say, Zimbabwe or Afghanistan is FAR bigger than the difference between, say, West Virginia or Mississippi and Connecticut. There is definitely a large wealth disparity between rural and urban China, but the fiscal situation is the same (same central governemtn). The main point, however, is that if you really want one currency, you need one monetary policy which really means one government.

[@stephenamaral1]

Easy to overthink this. Keep it simple guys.

[@chatsociety]

Great explanation, thanks!

[@advers1078]

@khanacademy all though i agree with your statements, one world currency doesn't necessary require one government it just requires one policy maker, in the case of Europe for example the EU makes polices for all nations which has to be accepted by members of the EU, however, the nation itself is self governing in the sense that areas in which the EU can make policies are limited by the interest of members rather then individual national interest,

[@hemant007manwani]

it simply make sense...thanks Mr. khan.....I.O.U :)

[@boeing747200lr]

Thank you, Sal!!

[@meanmanturbo]

So, any input on export based economies wanting to keep exchange rates of their currencies low? China artificially keeping the exchange rate low springs to mind. Great video as always!

[@theHDLify]

Does this mean that if a particular country has more exports than imports its currency becomes stronger?

[@noxure]

@khanacademy But two different states in the US can also have vastly different economic situations (ie, north and south) and there is an even more enormous gap between rural China and metropolises like Beijing or Shanghai. Yet, the US dollar and the Yuan are both considered as strong currencies.

[@ebzovi]

Thanks for posting

[@timgarland8421]

Great info. Thanks!

[@Rafesayyed0001]

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[@negochristian1]

You guys rly think Khan has time to answer all your questions ? xD Guys above are lucky, in a few years they will be able to say that they got their questions answered by Khan...It will be like now someone saying Bill Gates used to reply their messages. Thumb Khan up towards the Nobel Prize !

[@norwayte]

@khanacademy ... Right, Sal, problem area: differences (growth, debt, ...) And now? That's it? "Curing/Healing" own, self-made problems (...USA) for instance with currency "wars"?! As seen in the past? Outsource and/or prolongate own problems to other nations on their backs...and one favorite way to do it is currency-juggling? And other nations alike... One missing thing with the Euro: a really combined general policy. Keep on going...maybe we all get some ideas while watching your videos.

[@blevins25]

Except China has pegged ¥ to the $. They manipulate the value of the ¥ by adding more to the market.

[@الزينولدالمختار]

شكرا = thank you

[@ebrahimmamsa9677]

Great video. This video explains simply the currency effect on trade. As a forex trader, we know that, currency can be trade worldwide. But yes, there are some currencies which are valuable for every country and popular among all over the world, which are called major currencies. Basically forex people trades most of time with major currencies. I am trading currency with ECNCAPITAL. For me this one is the reliable forex broker.

[@annatsukiya]

That 'major currency' is called as Reserved Currency..

[@FoodTech41]

In reality, does the China pay the US in Yuan? My intuition told me they would change their Yuan into US dollar and pay the US. If my thought was true, there would be more demand for the US dollars and things would have gone the other way around. I am really bad at Econ and Math, so sorry if I'm wrong. :P

[@ivandate9972]

can you build such trade model goes if currency was decided fix all the time ?? what disaster will come?

[@Eveer.r]

I liked the video but sorry this last part is wrong, this is not how the trade balance happen after the currency exchange rate changes, what happens is that the chinese guy either continue to sell dolls for $1 and accept that he is earning less or he will make the price of dolls go up to 1.25 like you said but this will result in him selling fewer dolls & eventually earning less too, as for the american cola guy he will continue selling cola for 10 yuan and earn more.. and as a collective result of that the american will have alot of yuans he want to sell for dollars and the chinese will have less amount of dollars he wants to sell for yuans, which will result in dollar price going up and the exchange rate will balance itself

[@yagami0186]

but the demand remains the same.

[@ayeleru7489]

That's literally what he explained in the video

[@ASTARproductionsz]

Strong Pound Imports Cheaper Exports Dear (SPICED) visa versa

[@advers1078]

@khanacademy {just continuing my bickering lol} unification of all nations by making policy making a matter of international significant rather then the current state of things can be hugely beneficial in removing issues mainly cause by segregation of nations through policy and border control, although there certainly are issues with this way of doing things.

[@styles7887]

We need to produce the dolls and not buy them,if its getting to the point of higher and higher unemployment and lower demand for the dollar.That would bring jobs ,new buildings and investment opportunities;people will have more dollars and bonds in the u.s currency ,which means the demand will go up.

[@chriscalhoun516]

styles7887 ... So you do that? Make the dolls and sell them. If you can generate more interest in your dolls than a foreign competitor then it will work exactly the way you say. But why is demand greater for his dolls...aka why have US consumers chosen imported dolls instead of dolls made here? Why have US consumers chosen to export the jobs of doll manufacturer's?

[@VickiBee]

He even knows all the three-letter codes: KRW, KPW, CNY. He knows every last one of them. He's always making me feel stupid. :) Silly man. :P

[@chenrich11]

@vickiormindyb how did Sal offend your friend ?

[@norwayte]

...or maybe one currency world wide without speculation... :-)

[@BarbeauDaniel1]

and you could be a bit less colloquial maybe?

[@manaickillerdraciaux7582]

When they both Exported the Ships Fought to the death and claimed the treasure AAAARG Pirates

[@manaickillerdraciaux7582]

I got a Genius idea.... 10 yuan is 1 Doll-hair... get it, Dollar=Doll-hair :D... Plz Dunt walk away

[@RyanTheTuber]

It's quite disturbing that the United States was accidentally spelled as United Slates. Subliminal message if you still didn't get it...

[@jriccioj]

so, we don't need tariffs after all.

[@waddupboston]

Chinese currency is fixed, not floating so trade imbalances do not naturally reach equilibrium. Chinese government also frequently devalues their currency, making their exports much cheaper than our domestic products.

[@jriccioj]

why is having a trade deficit bad, though? The implication is that it's bad-- i don't understand

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[@saasiking6622]

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[@GenghisVern]

Now my brain hurts :)

[@BarbeauDaniel1]

dont write out EVERYTHING that you say it makes the video too long

[@McGyverPilot]

Long drawn out clunky explanations wasting more time waiting drawing diagrams. Not first like this so skipping to different video series.

[@unclespoon5495]

get to the point...too much speaking

[@captainobvious1415]

The point is in the entire video. Every time he speaks he is iterating the point....

[@davitkolxi2632]

That's what she said !!

[@einerus]

Constant repeating of every sentence makes it sooo anoying to watch this and listen. Constant ... repeating of ... every sentence makes .... it sooo .... anoying to watch .... this and ... listen.....

[@jjtheslayer69]

who taught you how to write? walt disney? XD