| CDSmith |
09-16-2008 02:26 PM |
Quote:
Originally Posted by sltr
(Post 14764545)
cdsmith-
while i might not have stated it properly by using the term *backed by*, my point is that when the dollar drops in value, so do other currencies' values.
|
Actually no, when the USD drops in value the CAD rises in value against the USD.
As I said, the value of the USD doesn't determine the worth of other currencies. Most countries back their own currency in some way, some in part with gold and other commodities, some with oil, etc.
Quote:
Originally Posted by sltr
(Post 14764545)
the title of the reuters article you posted is somewhat misleading.
from the article- while the value of the canadian dollar rose, due to oil exports, canada does not have an oil standard backing the canadian dollar. i.e. for every canadian dollar outstanding, your country does not have the equivalent in oil stashed somewhere.
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It doesn't have to "have" the equivalent in "oil stashed somewhere", the oil reserves in the ground themselves also serve to in part back the currency, as does all the other major commodities and preciouos metals that are produced here. So the article's title isn't misleading at all, the rest of the story is in the article.
Quote:
"The Canadian dollar is reflecting gains in commodity
prices," said Paul Ferley, assistant chief economist at Royal
Bank of Canada. "Also, growing concerns about the U.S. economy's prospects
that interest rates in the U.S. will likely have to be cut
further is weighing on the U.S. dollar and compounding the
gains for the Canadian dollar."
|
There you have it. Countries no longer need a "fort Knox" style of reserve or wharehouse that stores the magical valuable thing that backs the currency.
The USD is used to guage a currency's worth on the world market is all, like I said. And believe me I know all too well that as the USD gets weaker the CAD gets stronger. I've taken well over a 40% hit to that part of my income that comes from american companies, from the exchange rate alone. Over the past 5 years or so I've watched every $1000 USD I earn go from being worth $1500+ to at times just under par.
So no, when your money depreciates in value the worth of other currencies doesn't drop as well. They in fact rise as they are gauged against the USD. |
