business article 1 - Despite the high debt foreigners still...

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Business Article No. 1 Principles of Economics II – Micro Graham Nix September 14, 2010 Article The Times and Democrat China trims holdings of Treasury securities Summary Martin Crutsinger, author in The Times and Democrat, states the already apparent fact that China holds the most debt of any other nation. Crutsinger states that China has endeavored and for three straight months trimmed their holdings of American debt. As a consequence, interest rates have gone up in the effort of keeping China buying debt. With the eventual increase of interest rates, China and America's situation is becoming unpleasant. Although China's currency is quite low compared to the dollar, the increase of American dollars will result in an appreciation of the China Currency. Tragically, this will hurt small business owners who rely on cheap China goods to survive. Also, this will add stress to the common house hold and make it harder to find inexpensive merchandise.
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Unformatted text preview: Despite the high debt, foreigners still find American money attractive. This helps keep the demand high along with actions from the federal government. Actions such as keeping inflation down. Fortunately, inflation has been little to nothing and will hopefully stay that way until America can pull out of the recession. The Matter of buying of debt if crucial to economics because it effects money. Money is the method of exchange. If money has little value, then people need more of it to buy what they need. If money has a greater value, then people will buy more and have more money in their pockets. For this reason, it is crucial that China keeps buying because if they don't, the currency will depreciate and our standard of living will decline. References Crutsinger, Martin (2010, March 15) “China trims holdings of Treasury securities.” The Times and Democrat, retrieved September 13, 2010 from http://iw.newsbank.com...
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