How Currency Exchange Rates Effect Global Business

The entire world's economic system depends upon the exchange rate. For this reason, it is very important you learn how it works. How the currency exchange rates effect global business is like a thermometer, it measures the health of global economics.

First, you must understand by definition what the exchange rate is. It is the value of one nation's currency in comparison to another or to put it another way, if you took one U.S. dollar to Canada, would you be able to buy more than one item at a Dollar Store or not even one item?

The laws of supply and demand dictate how the currency exchange rates effect global business with something called a floating exchange rate. A floating exchange rate means that currency values "float" or fluctuate depending on how much supply is being demanded from that country in comparison to the other country with which it is doing business. It is the global market that dictates which country's dollar is worth the most.

How Currency Exchange Rates Effect Global Business

Governments can play a part in how the currency exchange rates affect global business as well. Many governments will put into place certain actions that will purposely devalue their own dollar. Why would they do this? It seems counterproductive, but actually it isn't. By deflating the value of their own dollar, that country will cause an increase in the demand for their supplies, kind of like when a store puts on a sale and attracts a crowd to their store.

A few years ago, a struggling Brazil did just that, they devalued their currency. As a result they attracted a plethora of foreign investors to their country. Many foreign businesses invested in Brazil's retail market, manufacturing companies, construction, tourism, banking, communication companies and many other industries boosting Brazil's economic system. Today, Brazil is benefiting by this sudden burst in its economy and the quality of life is greatly improving there.

Now you can see how the currency exchange rates effect global business becomes very important to world trade. All of these things have an effect on you. Your investment accounts, your 401K, even your own job are all affected by the global economy. Exchange rates are very important in determining which country, even which businesses globally will have the competitive advantage.

The law of supply and demand state that when prices are low, people buy, when they are high, they do not. The same works for world trade. If Japan can buy the same product for less from Germany than it can from the U.S., Japan will buy from Germany and the U.S. has just lost its competitive advantage.

The next time you consider taking a vacation to a foreign country, think about the exchange rate in a way that is more than just how much vacation will you be able to purchase. Think about whose country has the higher value in their currency, because now you know what it means to you.

How Currency Exchange Rates Effect Global Business
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The Positive Effects of Globalization

Globalization has a relatively new idea that the world has been embracing. The positive effects of globalization are numerous and extremely beneficial for everyone in all countries. It has been the most successful prosperity and anti-poverty movement in modern history.

The Advantages Include...
Forces businesses to compete on a global scale. This allows the market place to really work and gives consumers a better advantage. No long will businesses be able to corner markets because politicians protect them. They'll now to compete with foreign businesses that may or may not be able to do business more efficiently. Countries move to market sectors that they are better at. This simply means that the labor in a country is going to do what it's best at. There is no need for Americans to do manufacturing when someone in China can do it better. Our labor is better served doing something beneficial. The consumer is the real winner. Despite the desire from some politicians to protect workers, there are far more consumers than there are workers, but no one wants to seem to protect them. Consumers should not be forced to buy over priced goods from American buyers when you can get the same quality for less if it is made in China. Now consumers can get the best products for the best prices. Everyone grows more prosperous. Just look at China and India. Before globalization they were very poor countries. The standards of living were extremely bad. Now these people are becoming more prosperous. These countries having mega economic booms. People that could never afford a car are now getting them. Not to mention the fact from the consumers side that are benefiting from saving money which can be used to save or spend on other things.

These are the positive effects of globalization. It is a movement that is pro-free trade, pro-prosperity and anti-poverty. It is helping the developing world raise it's standard of living as well as raising the standard of living in the developed world.

The Positive Effects of Globalization

The Positive Effects of Globalization
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Facts on America's Economy

It's no secret that the United States is enduring an economic downturn. It's all over the media every time you turn on the TV.

I believe there there isn't a recession and that the United States is in a state of growth. Believe or not, it's true.

Whenever there's a economic downturn, it always sprouts back up even stronger and a lot more wealth is created turning this time.

Facts on America's Economy

The media has a lot people thinking in fear and scarcity. Which is not good, the media's job is to give out bad news, when have you ever heard something good happen on the news?

It's rare if you do and it gets a 10 second time slot.

For entrepreneurs like you and me, we must think in a state of optimism and abundance, because the future is very bright, believe it or not.

So here are the facts on America's economy.

I may have been preaching early on how good things are but the information is bad news to the normal eye.

But to the problem solver, what we call entrepreneurs these days, I see opportunities and markets for new products.

1- More women will file bankruptcy than graduate college this year in the US.

2- The number 1 resolution this year was to get out of debt - overtaking weight loss for the first time in history.

3- Last year - there were 80 million unpaid credit cards in the US alone with an average balance of 00.

4- Today, two income families have less discretionary income than single income families just a generation ago - now approaching 90 percent.

5- The average American family brings home less than ,000 a year.

6- 79 million Americans plan to start their own business in the next 3-5 years according to Forbes Magazine.

7- Both Donald Trump and Robert Kiyosaki recommend Network Marketing

Now based on those facts how many potential products or services could you come up with to serve this market. The possibilities are endless!

Facts on America's Economy
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What Does Ron Paul Stand For - This Is What He Believes

Many conservatives know what Mitt Romney stands for, but what does Ron Paul stand for? What does Ron Paul believe? Paul is a different kind of Republican. He often leans more as a libertarian candidate than as a Republican. He does not fit all of the standard GOP positions, but he is strong on issues that matter to most Republicans. He is most well-known for his positions on military and the economy, and many people like what he says. He is the candidate most likely to run as a third party candidate if he doesn't win the GOP nomination. This could be detrimental to the likely Republican nominee if he pulls too much support from the elected Presidential candidate.

So...do you want to know what does Ron Paul stand for? Here we go!

Paul on states' rights
Paul is a strong supporter of states' rights. He believes that the states should be much more powerful than they are today. He believes the individual states should be able to make their own decisions regarding any social matters that are not explicitly directed by the constitution. He thinks the death penalty should be regulated by the states. He also believes the states should make their own decisions about education and marriage too. He even believes states should be able to make their own decisions regarding drug use like medical marijuana.

What Does Ron Paul Stand For - This Is What He Believes

Paul economic policy
If you want to know what does Ron Paul stand for, you first need to know where he stands on economic policies. He has written six books on Austrian school economics. Paul always votes against tax increases. Paul is against raising taxes under any circumstances. He even feels that the country should abolish the state income tax, and he believes this can be done if we scale back the spending in the Federal government to 2000 levels. He gets a lot of support for his positions on the economy.

He believes that the Federal Reserve should be abolished. He does not believe that the country should return to the gold standard, but he is very concerned about inflation, and he is often known as an inflation hawk. He has been warning about the threats of hyperinflation since 1981.

Paul Social Views on Abortion and Gay Marriage
Paul is a pro-life supporter. He spoke at the National Right to Life Committee Convention in 2007. He pushed for legislation that would give states the right to decide if they want to support or oppose abortion laws. He opposes gay marriage, but he believes states should have the right to decide how to rule on the issue.

Paul Foreign Policy Views
Ron Paul's views are significantly different than most Republicans on foreign policy matters. He is a strong supporter of national sovereignty. He opposed the Iraq War Resolution of 2002. He does not believe the United States should be involved with the North American Free Trade Agreement, and he believes we should withdraw membership from the United Nations. He believes strong National sovereignty is more important. He believes that most of our military resources should be used to enforce border security. He did support military action against terrorists involved in the September 11th attacks, but he feels the attacks should have been more limited to targeting specific terrorists as opposed to invading Iraq and Afghanistan.

If someone asks you what does Ron Paul stand for, tell them he stands for responsible economic policies, strict interpretations of the Constitution, strong national sovereignty, and limited military involvement outside the United States. Many people cannot honestly answer what does Ron Paul believe, but he would be an excellent candidate to run against President Obama in 2012.

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The Current Economic Situation - Global Recession - The Cause of the Current World Financial Crisis

The primary cause of the current recession and economic crisis was the drastic increase in subprime adjustable-rate mortgages and the CDO's (collateralized debt obligations) that they comprised. The number of subprime mortgages issued in 2005 and 2006 increased dramatically while prime mortgages decreased.

Mortgages are securitized by the federal government; they are pooled together and sold in sections, which spreads the risk and uncertainty to those who take part (nearly everyone). It created a huge web of risk in that the securities are dependent on the underlying mortgage values. The value of the CDO's and their securities decreased and were miscalculated to begin with. Rating agencies could not accurately determine the value them. This is why so many people lost nearly all of their retirement which was largely based on these securities.

Worst of all, the federal government actually encouraged the purchasing of these securities without knowing the underlying risk involved. The web of risk was spread worldwide, not just in the United States. Major institutions like AIG, Citi, Chase, Bear Sterns, etc. held many of these CDO's, and many aspects of society all around the world were dependent upon these huge corporations, thus basically when they failed, society failed.

The Current Economic Situation - Global Recession - The Cause of the Current World Financial Crisis

On the surface level, borrowing and lending also was at an all time high in the past few years. Many people cite the Federal Reserve, Inflation, and the money supply as causes (as if that means something), or random phrases they here on the news, thinking they know what they're talking about, but these things are not really related to the whole situation at all.

The Current Economic Situation - Global Recession - The Cause of the Current World Financial Crisis
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