Why is Canada’s dollar worth more than the US’s dollar?
I don’t understand how the value of money works. Why is the US dollar rate sinking so drastically compared to Canada and the Euro. I don’t want to seem ignorant, but It seems like the economy in the US would be much better than Canadas because of its numerous major cities, resourses, and corporations.
The US is a “net debtor” nation – the country as a whole has borrowed money (through Treasury debt) to maintain our current way of life. The Treasury bonds are held by investors, mutual funds, pension funds, and foreign governments like China and other trading partners. The US government spends more than it collects in taxes – on day to day operations, the war in Iraq, and entitlements like Medicare and such.
Will that debt we owe become ‘due and payable on a certain date in time? We’ll see.
Canada has some debt but not to the same extent as the US. Canada also has more natural resources than it can consume, so it exports them.
