Posts Tagged ‘trade’

Mercantilism is…

Wednesday, July 27th, 2011

Mercantilism is an economic theory that was popular in Europe during the 17th century.

The basic idea is that a country’s power and economic well-being come from having lots of precious metals around, like gold and silver. This leads to arguments against free trade and for protectionist trade policies. By gaining a trade surplus (i.e., exporting more than you’re importing), a country can collect more and more of these metals from other countries buying its goods.

While mercantilism is usually associated with European trade policies of the somewhat distant past, it still pops up in today’s world to describe a country that is acting in mercantilistic ways.

NAFTA is…

Thursday, July 21st, 2011

NAFTA is the North American Free Trade Agreement. In the 1990′s the United States, Canada, and Mexico negotiated NAFTA, which removed tariffs and other barriers to trade. The agreement makes trade between the three nations of North America mega-easy and is intended to generate trillions of dollars of revenue every year.

Why China’s Currency Change Matters To U.S.

Monday, June 21st, 2010

China changing its currency policy may mean a big change for everyone!

  • For a long time, China has (unfairly) kept the value its currency low because it helps keep Chinese industries competitive in the global market.
  • China is expected to finally make a change, after lots of pressure from the Obama Administration.
  • The change would mean a stronger renminbi (or yuan), more affordable American goods in China, and more expensive Chinese goods in America.
  • If the renminbi is allowed to fluctuate, it could potentially increase the value of the U.S. Dollar.

Facts and Figures

  • Since 2002, China has sold $2.187 trillion of its own currency to prevent it from gaining value.
  • China is currently exporting four times more to the United States than the U.S. is to China.
  • 6.82 renminbi equals 1 USD.

Best Quote

“Whether to let the yuan slowly appreciate or let it rise to a tolerable range after careful calculation, I think it is better to have that quick, prompt appreciation.” - Xia Bin, Member, Monetary Policy Committee of the Chinese Central Bank

The IMF is…

Tuesday, October 27th, 2009

The IMF is the International Monetary Fund, an organization established to encourage international trade and financial cooperation, stabilize exchange rates, and combat poverty. Countries that are members of the IMF contribute to the fund in gold and in their own currency, and they can then withdraw from the fund in order to pay off debts to other nations during times of deficit.

An Import is…

Wednesday, September 23rd, 2009

An import is something that is brought into a country from another country. For example, true Champagne is only produced in the Champagne region of France, so if you want it and you live outside of France, you have to import it.

The World Trade Organization is…

Friday, August 21st, 2009

The World Trade Organization (WTO) is the international body that deals with trade issues between nations. It provides a forum for moderating any trade talks, but it also is an advocate for trade liberalization – it tries to remove trade penalties or obstacles that countries might have in place.

A Trading Desk is…

Monday, August 10th, 2009

A trading desk is a place in a bank, brokerage, or other entity that trades financial instruments. An equity desk trades stocks and a fixed income desk trades fixed income.

An Export is…

Monday, August 10th, 2009

An export is something made locally that’s sold and shipped to a foreign country. Tech companies in the Silicon Valley in California make computer chips that are exported to be used in computers all over the world.

A Trade is…

Wednesday, July 29th, 2009

A trade is a transaction involving one party (the buyer) buying a security, or something of value, from another party (the seller). Basically, it’s when two parties exchange items of approximately equal value. So, while you can trade stocks, you can certainly also trade baseball cards.

Free Trade is…

Wednesday, July 22nd, 2009

Free trade is when countries can buy and sell goods with one another without any government barriers like tariffs or, at the extreme, an embargo. That doesn’t mean you get stuff for free, it just means the government isn’t adding any extra costs to your purchase.