Imports, Exports, and Exchange Rates: Crash Course Economics #15

Imports, Exports, and Exchange Rates: Crash Course Economics #15

Hi I’m Adriene Hill and I’m Jacob Clifford
and welcome to Crash Course Economics. Today we’re going to talk about international
trade. So we all know our stuff is from everywhere. Bangladesh, China, Vietnam, China again, but what does it actually tell us about the global
economy or the US economy? And who’s is benefitting from all this trade.
And who’s gonna clean all this up? [Theme Music] International trade is the lifeblood of
the global economy. Basically when a good or service is produed in, let’s say, Brazil
and sold to a person or business in the US, that counts as an export for Brazil
and as an import from US. As you might expect, the United States is the world’s
largest importer because Americans love their stuff. In 2014 Americans import
over two trillion dollars worth of stuff, like oil cars and clothing from
countries all over the world. And if you look around your local big box store, it
feels like everything is made in China. And we do import a lot of things from
China but in terms of both imports, and exports our largest trading partner’s not
China, it’s Canada. The US and Canada trade over six hundred billion dollars worth
of goods and services each year. The US imports a lot from Canada but exports
almost as much. In fact, the United States is the world’s second-largest exporter. It
sells high-tech things like pharmaceuticals, jet turbines, generators
and aircraft to countries all over the world. It also exports intellectual goods like
Kanye West albums and Pixar movies as well as bulk commodities like corn, oil
and cotton. The annual difference between a country’s exports and imports is
called net exports. So if Brazil exports 250 billion dollars worth of goods and
imports 200 billion that its net exports are fifty billion. That means Brazil has
a trade surplus. In 2014, net exports in the usmore negative 722 billion dollars. That’s what you call a trade deficit. Some people assume that having a trade
deficit is inherently bad. Why does the US import nearly all of clothing? Why can’t we clote ourselves? US producers could easily make more
than enough clothing to keep all of us dressed. But they don’t because they focus
on other things that they’re better at producing. The US buys clothes from other
countries because we can get them cheaper than if we made them here. This
is the value of international trade. It doesn’t make sense to make everything on
your own if you can trade with other countries that have a comparative
advantage. It’s worth mentioning here that these savings sometimes come with
other costs, especially for the people who are producing these goods overseas.
Unsafe and unfair working conditions, and environmental degradation can be ugly
side effects of internnational trade. And we’re gonna talk about
that. For today though let’s get a handle on trade deficits. It can seem like
exporting would make a country wealthy while importing would make it poor. After
all, if we buy products produced in other countries than were shipping jobs
overseas, right? Well only to an extent. Imagine that I have a choice of buying
an American made TV or a TV made in Malaysia. Because of lower labor costs in
Malaysia the imported TV cost $200 less than the American made one. So I buy the
imported TV. That may cost jobs at a TV factory in the US but I saved $200 by
buying the imported TV. And what am I gonna do with those $200? I’m gonna
spend them on something I couldn’t have afforded if I bought the US TV. Like maybe
taking my family out to a baseball game or to a restaurant. That creates jobs in
those industries that wouldn’t have existed if I’d bought the more expensive
TV. Economic theory suggests that international trade reshuffles jobs from
one sector of the economy to another, like from the TV factory to the restaurant. But the quality of these jobs can be markedly different. The guy assembling
TVs at the US factory was probably making a lot more at his manufacturing job
before he got reshuffled to the burrito assembly line at Chipotle. Which is just
to say all this is really complicated and what is good in the aggregate is not
necessarily good for individuals. For example, look at the North American Free
Trade Agreement or NAFTA. It was established in 1994 to drop trade
barriers between Canada, the United States and Mexico. Critics point out that
NAFTA significantly increased US trade deficits and they say it decreased the
number of manufacturing jobs in many states, as companies moved out of the US.
Proponents of free trade point out that the US economy boomed in the 1990’s, creating millions
of jobs including manufacturing jobs, and that free trade has decreased the prices of all sorts of consumer
goods, from vegetables to cars. So despite the fact that some workers and industries were
clearly hurt, economist would tell us NAFTA’s had a net positive impact on all
three countries. By the way, you know Thought café, the makers of the Thought
Bubble? They’re Canadian. These graphics are imported. The debate over
the value of specific trade agreements continues. But it’s unlikely that the
world’s largest economies will return to strict protectionism. Protectionist
policy, like placing high tariffs on imports and limiting the number of
foreign goods, usually hurts an economy more than it helps. There are now several
organizations designed to eradicate protectionism, most notably the World
Trade Organization or WTO. The WTO has been effective in getting countries to agree
to specific rules and help settle disputes but it’s also been accused of
favouring rich countries and not doing enough to protect the environment or
workers. Trade between countries depends on the demand for a country’s goods,
political stability and interest rates, but one of the most important factors is
exchange rates. Basically this is how much your currency is worth when you
trade it for another country’s currency. And let’s engage in some foreign trade
now by going to the Thought Bubble. Suppose the US-Mexico exchange rate is 15 pesos to the dollar.
If an American’s on vacation in Mexico and wants to buy some sunscreen that cost 60 pesos, they’ll have to
trade four dollars for pesos. Likewise if someone from Mexico is on vacation in the US and wants to buy a
$20 t-shirt she will need to exchange 300 pesos for dollars. Now one let’s think about what happens
if the exchange rate goes up to twenty pesos per dollar. Now to buy that 50 peso
sunscreen in mexico it’ll cost the American tourist $3 instead of four. We say that
the dollar has appreciated. At the same time the Mexican tourist who wants to
buy the $20 t-shirt will need four hundred pesos instead of 300. It works
the same way with imports and exports. When the dollar appreciates, it gets
cheaper for US consumers to import foreign goods, and US exports to other
countries get more expensive. US imports rise and export fall. On the other hand what if the exchange rate fell to 10
pesos per dollar? Now to buy that sunscreen, the american tourist needs $6. Each dollar has gotten less powerful. We say that the dollar has depreciated. At
the same time, the Mexican tourist who wants to buy the $20 t-shirt needs only
two hundred pesos. So when the dollar depreciates, foreign imports get more
expensive which means they fall, and US exports to other countries get cheaper
which means they rise. Most currencies, like the peso and the
dollar have floating exchange rates that change based on supply and demand. Like
when the US imports more products from Mexico, they exchange dollars for pesos.
This will increase the demand for pesos, and peso will appreciate. At the same
time, the dollar will depreciate. Now some countries have elected to peg their
currency to another currency. This is when a country’s central bank wants to
keep the exchange rate in a certain range, and they buy or sell currencies to
keep it in that range. The Chinese government was well known for buying US
dollars to keep the Chinese currency artificially depreciated. When the US’s
importing goods from China, the yuan would appreciate. Than the Chinese
government would turn around and buy dollars which kept the exchange rate
about the same. This kept Chinese exports cheap for Americans. Up to this point, we
focused on exporting and importing goods and services but there’s a whole other side
of international trade that involves financial assets. Let’s look at something
called the balance of payments. It might feel more like accounting than economics,
but it helps to show how flows of money and flows of goods and services are opposite
sides of the same coin. Every country keeps an accounting statement called the
balance of payments that records all international transactions. It’s made up
of two sub-accounts, the current account and the financial account, sometimes
called the capital account. The current account records the sale and purchase
of goods and services, investment income earned abroad, and other transfers like
donations and foreign aid. So when the US buys fifty billion dollars of computers from
China, that’s recorded in the US current account. So this is a simplification, but
when Americans spend money on Chinese goods, the people in China, in theory, have
only two things they can do with that money. They can buy US goods, or they can buy
US financial assets, like stocks and bonds. These transactions are recorded in
the other side of account, the financial account. There is a reason why the flow of
goods and the flow of money are symmetric. If consumers, businesses, and
government want to buy more stuff than their country is producing domestically, they have to import
it. So there’s a trade deficit. That country has to sell assets to pay for those imports, and that’s
recorded in the financial account. The United States has a very low savings rate which
means it’s consuming everything it’s producing and it sells assets to pay for
the additional output it brings in from overseas. Americans are choosing to run a
trade deficit. International trade, like everything else in economics, is about
trade-offs and choices and winners and losers. In purely economic terms trade
deficits and surpluses are the result of people and nations seeking their own
self-interests. But while everyone is acting in the self-interested way,
international trade doesn’t always meet our individual interests. What might be
good for the wider global economy, might be really bad for me or my hometown. But
in the aggregate, trade does improve the global standard of living. It’s just sometimes hard to see
up close. Thanks for watching, we’ll see you next week. Crash Course Economics was made with the help
of all these nice people. You can support Crash Course at Patreon, where you
can help keep Crash Course free for everyone, forever. And you get rewards. Thanks for watching, DFTBA.


  1. Rob Brenton says:

    The Flying Spaghetti Monster is LORD !!!!

  2. W K S says:

    Thanks for this video. Really clear and easy to follow explanation 🙂

  3. john case says:

    ACDC belt….SWAG

  4. Janjan Abc says:

    they dont need to talk fast if they are explaining something

  5. Tracey Sutton says:

    economists are assholes. oh, more importantly, econ101 isn't science.

  6. yassin farid says:


  7. Caveman says:

    I have a question: When China and Russia trade in their own currencies what is the exchange rate based on?

  8. Mehboob ur Rehman says:

    still doesn't answer the one basic question I had, who decides what the exchange rate is going to be? Demand and supply is all fine but it's not like if I go to exchange dollars for pounds the guy at the counter will go into a deep thought estimating demand for dollars and come up with number there and then. So who decides and dictates that I dollar equals 0.88 pounds?

  9. Ali Khan says:

    I liked the video. Especially the part where she’s throwing clothes on his face. jokes apart very informative.

  10. Wallace Callow says:

    How about one world socialism without borders? All businesses paying net incomes to the global collectives' local chapters. Everyone a part owner. One global security force replacing all military. Granted, you'd need to somehow prevent mass migration from third world to first world, mainly because of PRESENT infrastructures. And come to prior agreements between nations and cultures to compromise on one general culture, and ethics, and laws, before bringing down the borders, (good luck!). But once all the worlds' resources were available to share, it wouldn't take too long to upgrade the infrastructures in the poorer regions. And anyone in those regions could conceivably get a job, due to the collective's non-profit m.o. Allow businesses to have some competition- yet still part of the collective- by diversity of prices and products, to encourage innovation and sales.

  11. Wallace Callow says:

    Tariffs aren't about ending trade. Just regulating imported products, materials, and parts. Some imports we may need, but others would be just competing with companies at home too much, once our factories were up and running. I say to the President- if you enact tariffs on those unneeded imports, just make sure that you have factories up and running, making those products, materials, and parts before you raise tariffs on them, since we'll need those imports in the meantime. Except for imports like steel, etc., since we still have some producers, here, that haven't located to overseas production for cheap labor. They're the ones getting screwed by the trade deals. Then, later, we can produce those things here, again, with less foreign competition. As long as future presidents go along with it. I know it would be a risk for businesses to build new factories, unless they can get some assurance that we wouldn't change back to free trade, again. But we need to lower the trade deficit, and this is one way. By limiting imports. We have materials and technology to do it here. And it shouldn't raise prices too much on domestic goods, compared to imports, because there really isn't much difference in prices between the two, now. For one thing, you have to pay much more to ship goods across the world. And many good paying manufacturing jobs would open up again, lowering unemployment. Imagine all the jobs created to produce replacements for all those imports! Either we get to a one-world without borders, or else have regulated trade. Don't combine the two, ('free' trade). Countries who have trade surpluses ought to use their factories for their own internal economies.

  12. Joshua Barnhart says:

    Thanks for making this video. I'm taking an upper-level Macroecon course and this has helped make it less abstract. Keep it up!

  13. Juanita Sullivan says:

    Talking way too fast. Couldn't make it past 1:44

  14. hari sankar says:

    Export of ..cashewnet..palam oil…etc from South Africa to other Countries for more details contact on

  15. AllAtousa says:

    this was a fantastic video.

  16. Shabbir Ahmad says:

    increase in oil price increase in inflation

  17. Suzy the Cockatoo says:

    Did he really say "gooder"?

  18. Caleb Frezza says:

    the guy looks like mark cuban

  19. Evan Erickson says:

    Comparative advantages only work in a vacuum where each country is exporting and importing the same number. A trade deficit is bad because it means we are importing more "value" then we export and thus capital is leaving the USA and going abroad. We need to have a 0 trade deficit to fully harness comparative advantage. Without a 0 trade deficit, we are prone to outsourcing which is where there is an absolute advantage, not a comparative advantage.

  20. Aidan . Z says:

    ugh whys she so fast

  21. Charles Yeo says:

    Basically, trade deficit is not the devil in it self. It is how the trade deficit is created that is the problem.

    Manufacturing jobs in the US has decreased over the years is simply because the products it manufactures is not competitive in the market. Using protectionism to protect the competitiveness of the product in the effort to keep the jobs only delays the inevitable. Eventually the whole house of cards would come crashing down and everyone would lose their jobs. A business can not keep running a loss and the government can't keep protecting it if it intends to be agile and competitive.

    The problem is that as the sector of economy moved away from manufacturing, the jobs that are left behind to compensate is not tailored to traditional manufacturing trained human capital. Factory workers and miners don't want to lose their jobs and find out that now they have to go to college to get a degree in computer science. Or become a male nurse. Or become a waiter. They can't or don't want to move to the big cities and start new life there. not only do they have to battle with retraining in different skill set, they have to battle with younger workforce for jobs and they have to deal with the social stigma of not adhering to gender role accepted jobs.

    trade deficit is not the problem in itself. the problem happens when people are left behind as the economic environment changes, and is too slow to keep up with it.

  22. Joshua Rice says:

    This ain’t John green

  23. Cheezit_ Gaming says:

    Why does he look like Reggie from Nintendo?

  24. Jill Elkins says:

    Trying to study for economics but every time i watch this, I almost fall asleep… ugh

  25. B. Lipkowitz says:

    Tariffs cost each citizen of US more$$$$for everything we get. The business owners do make more$$$$, but the more $$$$comes from the consumer. Wake up!

  26. Oudom Chan says:

    I love you channel so much..

  27. Giorgi Maisuradze says:

    Nice… Thanks!

  28. AnaisMartane says:

    China just needs to dump american treasuries and spend the 2 trillion on thousands of SSBNs. america will return to a trade balance hopefully and China can finally use the decades worth of trade surplus towards self betterment of the Chinese nation.

  29. Horton El Troll says:

    Economists would say we NAFTA what? omg this is a joke.

  30. Horton El Troll says:

    NAFTA was a nightmare. It costed the US over 40 million manufacturing jobs. Maybe quit taking advice from left leaning economists? And those graphics are imported? You do know that doens't increase our GDP? Thanks for outsourcing.

  31. Alexander Bourne says:

    I wish i could support this by paying money…

  32. Bonde Barca says:

    Could you explain whether or not there is a disadvantage for countries whose currency is not a reserve currency therefore have to have foreign exchange reserves and how trade deficits impact them moreover if they have foret denominated debt

  33. divyanthj says:

    4:50 ha ha ha. Some regular guy from 3 years into the future is laughing…


    Correction: when US buys an American made television vs an imported foreign made television yes you save $200 on the imported but a US worker will not have a salary of $3000 to spend it in the economy therefore you’re hurting the economy not helping

  35. whousay Iam says:

    Its a shame In the Year 2019, I am a 33 year old truck driver that cant afford any good and services. Today's my sons 6th Birthday and he has lived his hole life in Low income Apartments as the only white kid. I don't even have a car, can't afford one.. What good is paying Social Security and income taxes if one excluded from the services the tax supports??

  36. whousay Iam says:

    Why Want The US Ratify The International Covenant on Economic, Social and Cultural Rights (ICESCR) ??

  37. Tomas says:

    4:52 Donald Trump be like: "Hold my beer" 😀

  38. Titus Wang says:

    He didn't say, "Thanks, Thought Bubble!"

  39. Jacqueline says:

    "Intellectual goods, like Kanye West albums"

    That's debatable…

  40. PlaneetRuk says:

    When someone from the USA says he is an American is like a German saying he is an Europe/African

  41. GLEN 7k says:


  42. Ryan Doyle says:

    The most amazing thing about this video is the Karl Marx bust on the desk in background.

  43. Ryan Borganson says:

    Woah… yeah. That deal with china is not gonna… uh…. yeah no let's not do that. Trumps definitely right lol.

  44. tay's got crown says:

    Why do America even export Thane west albums they ,are waste

  45. cool raizers says:

    Okay fine if the tv costs 200 dollars less but what about the logistics and shipment cost. Wouldnt that cost will make it equal to American rate. Plz answer my question

  46. ray1983able says:

    Net Exports , Trade Surplus & Defecite , Re -Shuffling Jobs , Protectionism , Exchange Rate , Dollar appreciate & Depreciate , Balance Of Payments .

  47. Lassiter Bonano says:

    NAFTA stunk for America. Do your research first

  48. Андрей А says:

    Long story short, USA buy goods for free on 700 bln dollars every year, frocing China and other countries to buy US treasuries. which worth nothing and they will never return their money back.

  49. Jeff Lokanata says:

    Hey, Crash Course export this video to my country. So a trade deficit for my country.

  50. Jigar Chills says:

    Take your time in your delivery… is too speedy

  51. Micah Wright says:

    Kind of confusing near the end, but at the same time, I'm half asleep right now.

  52. Cosmic Mariner says:

    Lesson from this Video, "Global FREE TRADE may put you out of work and turn your small community into a ghost town, where skilled jobs include, "Welcome to Walmart!", or "Would you like fries with that?" or "Do you need a date Mr?" but think of the rising wages in the 3rd world, and the exploding profits of corporations who will sell them the products you can no longer afford. WHEN LIBERAL RACE MONGERS GET BUSINESS DEGREES AND RUN THE WORLDS CORPORATIONS. They love fine things, but you should learn to have less.

  53. John Trammell says:

    Anybody have a set of questions that can be used with this video????

  54. Liam Li says:

    How did they found these two to present, it is just fantastic.

  55. Aaron E says:

    Can we force dmfp to watch this? Just tell him it's about him…. he'll watch it!

  56. SORA, and my pronouns are bleep bloop says:

    @ 8:32 He just does not even cover the fact that the Chinese have a third option… They BUY OIL…. Because OIL is traded in U.S dollar….

    There is part of the problem, because when they get our cash, they can use it to buy product from a different nation…. This is why we have such a deficit. In theory not a bad thing, but once oil is no longer traded for in U.S dollars we might be in trouble…… Because as the deficit proves, China is more interested in using U.S dollars for buying products in other places. Rather than buying American products or Investing in American companies.

  57. Lil Roizman says:

    liberal and superficial
    you shouldnt go reproducing ideologic things like ricardo given as truth just like that

  58. vietsub says:

    should we restrict import?

  59. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years
    we all wont be here because of global warming.

  60. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  61. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  62. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  63. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  64. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  65. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  66. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  67. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  68. Jayden Pearson says:

    Why do you waste your life talking about stuff that wont matter in 10 years

    we all wont be here because of global warming.

  69. Azar K. says:

    "It doesn't make sense to make everything on your own"
    Trump takes the mic…: "CHI-NA"

  70. David Trujillo says:

    Are you guys issuing an amendment to this video, now that Trump made China stop stealing intellectual, and artificially lowering their currency value and the economy has skyrocketed so much not only the market is doing well, but more importantly the GDP has gone over 3.2%

  71. Pete Eddy says:

    It feels like the US is becoming more of a “service” economy and That just seems like a bad idea.

    We can’t have a country that is primary employed by the Chipotles of the world.

  72. Rudolph Stoltz says:

    It is not 100% accurate. Depends on the party that you support.

  73. daniyal k says:

    it's funny watching this today in 25 may 2015 amid the trade war of U.S on china

  74. Nyssa Syratov says:

    yuan is pronounced wrongly

  75. Leslie Brown says:

    Deficits mean your becoming poor. 728 billion worth of poor. Cant spin it any other way.

  76. Commercial Art Services Art Work says:

    Very typical pro trade argument – I'm sure these people were paid to do it like the others. Virtually every protectionism explanation you find is pro "free" trade. Amazing what a couple of million dollars can do to control a conversation. The WTO is an organization designed to cement the elites power and treat you workers in every nation the same. The same as the lowest bidder on labor that is.

  77. Richard Wagner says:

    1:49 Irony is speaking about economics while having a Karl Marx piggy bank on your book case.

  78. Christian Czarnowsky says:

    "intellectual goods" and "Kanye West Albums" shouldn't be in the same sentence

  79. M .G says:

    I really appreciate your way of facilitating those kinda solid definitions and make it simplistic for us

  80. Laskuna says:

    Greate vid.

  81. One Above All says:

    "Best wishes, John Green"

  82. Evan O'Neil says:

    i see this and why does he have acdc belt

  83. Archana Verma says:

    hello u both are best .. can I get ur videos in Hindi language

  84. Uncle Putin says:

    How do you spend that extra $200 that you save by buying the TV made in Malaysia? you spend it on rehab for your opiate addicted son who has no job because the jobs were all shipped over to Malaysia.

  85. Uncle Putin says:

    This video is not very good. you start out spending a lot of time on simplistic Mickey mouse stuff and then when you get to the current account in the financial account you whizzed through at a hundred miles an hour and nobody can understand anything.

  86. NFN99 says:

    To anyone who has money and wants to launder this money we can buy you real estate and stock from the stock exchange in Kuwait only You have to transfer the money from your account to our account in Kuwait Information Watts 0096599706407

  87. crowbird213 says:

    Our trade deficit is caused by exporters to the US buying Us treasuries instead of converting their US dollars into their home currency. Thus the US dollar is propped up to levels that won't allow trade balance. The solution isn't protectionism but eliminating debt, so their isn't a US treasury bond available.

  88. Ilham Kusuma says:

    so why US dollar always appreciated when they always deficit? ahhh CCP always buy bond of USA.

  89. Joe Barilari says:

    screw imports, buy American, Don't Fuq your buddy

  90. Joe Barilari says:

    this is a fluff piece that ignores the currency manipulation

  91. Warrvec says:

    Your Karl Marx statue. Why???

  92. Siyan Saheem says:

    it is …….


  93. Gemein Hardd says:

    8:55 Americans don't save and sells assets, now this is financial stupidity. This is why China is richest now, buying up all American assets

  94. Diane Meyer says:

    Crash Course missed the boat on this one. You introduce the concept of a trade deficit and never address the consequences of perpetual trade deficits such as we in the United States have. I know if I spend more than I sell year after year after year I will become hopelessly in debt. Why is the same thing not true for countries such as the United States? Let’s see you answer that one please

  95. Umar Sebyala says:

    Watching this in 2019, in the heat of a US -China trade war… so much for non protectionism policies…

  96. talos1279 says:

    With the advance of technology today, everyone is capable of making everything by themselves. They don't need the other countries to produce goods for them.

  97. talos1279 says:

    China has been smart in knowing what is really important to them: the technology to produce high quality goods and services and the human resources capable of producing and using these technologies. By making their currency depreciated, they were able to get a lot of manufacturing contracts. This had resulted into a lot of bad things like unfair trade practices, heavy exploitation of workers, pollution, human rights problem, etc. However, the good side is that they were able to get the US currency to exchange for higher technology, education on local workers and engineers who had learnt how to do things, and business people who know how to conduct business in new industries that had not been in China in the past. The new industries include: research in pharmaceutical, health care, telecommunication, automation, robot, artificial intelligence.
    If there is one aspect that China tops all countries in the world, it's the number of engineers specialized in all sorts of fields. What most economic theories lack to consider is the value created by the human resource, especially in the 4th revolution which is focused on creative industry.

  98. benedict pravesh says:

    Crash Course: No large country will go for protectionism
    Donald Trump : Hold my Beer

  99. Tim McMahon says:

    One thing that they tended to gloss over was the fact that a negative trade balance may be beneficial in the short run but can hurt a country in the long run as it trades its financial assets for consumer goods. In the case of the U.S. and China for instance, China sends us cheap goods and receives Dollars and then spends those dollars on U.S. financial assets such as stock, bonds (both Corporate and Government) and it spends a small portion on U.S. goods. So, in the long run, China could end up owning most of the U.S. companies. Some financial analysts have said that the U.S. will end up trading all of its productive assets for a pile of cheap toys.

  100. Shreeya Mittal says:

    Conclusion: Don't buy TV's, steal 'em.

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