3 ms·
Why does it matter that someone pays with dollars and at a certain point that is translatted into pesos. By the way, not all industries work this way, a fair nu
by Latteland 8y ago
Why does it matter that someone pays with dollars and at a certain point that is translatted into pesos. By the way, not all industries work this way, a fair number of them use us dollars (more than just oil).
The fact that you pay in pesos eventually means if pesos lose value internationally you could pay them less (but dollar cost is the same). But that's not guaranteed.
- throwaway34241 8y agoIt matters because the dollars stay in the US and something must happen with them. So it's not like we are just sending them money and getting nothing in return. As soon as they are exchanged for pesos, that means someone else bought dollars and is going to do something with them. Some industries are priced in dollars but the only major country where people actually spend dollars (without exchanging them) is the US. A trade deficit means overall the other country is buying more investments instead of goods. But those investments are in the US. To actually spend the money somewhere else they would need to exchange it again. And those investments in the US aren't inherently a bad thing. If it's just buying US government bonds and the government not doing anything productive with that money it might be a bad thing though.