AARP the Little Book of Economics by Greg Ip

Author:Greg Ip
Language: eng
Format: epub
Publisher: Wiley
Published: 2010-08-25T04:00:00+00:00

The Bottom Line

• Global capital markets let investors diversify their portfolios and borrowers choose from different sources of capital. There’s a downside, though: Investors’ savings may be battered by events in far off countries, while companies and countries can abruptly have their access to capital cut off.

• Currencies over time reflect their purchasing power and thus countries’ inflation. But in the short run, economic growth, interest rates, and current and capital account balances drive currencies, sometimes violently.

• The United States borrows cheaply abroad in great part because foreign central banks like to hold dollars: they’re safe, easy to convert to other currencies, and backed by a strong, stable country.

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