Asked in Investing and Financial MarketsDebt ConsolidationForeclosureEconomics
Does the failing US economy affect other countries?
March 31, 2011 11:44PM
Of course it doesyer mom lol jokin. The world economy is interconnected on many levels. For instance, you may have noticed the huge jump in gas prices for a time during 2008. While there were many factors involved in this, one major one was that oil is traded in US Dollars. As the value of the USD falls, the amount of oil that $1 purchases decreases (thus increasing the price of oil). While most easily noted in countries that trade goods in the USD, the price of oil is a huge factor in the cost of moving goods around the world. If it costs more to move goods, naturally the goods cost more when they arrive.
This is a meager example of one minor facet of world economy at work. There is, without a doubt, a nearly infinite number of other examples that could be given, but I will let wiser economists than I try to give you a better explanation. However, the direct answer to your question is yes, a failing economy in the US (or any major trade nation) has a ripple effect throughout the world.