Beware the carry trade!

[houdapurple]

i can feel my brain getting bigger the more i watch ur videos

[metals0999]

A depreciating USD in effect reduces the savings/wealth of Americans as all imports will cost more for them to buy.

[SupremeUltimateone]

everyone needs a drink

[nyc10101]

thank you so much, i've learned 2 things from you today. carry trade and uptick rule.

Thank you,

P

[ghache88]

very very clear explanation, thank you, i've got an Asset management exam tomorrow, for my last Management Bachelor year, and this helped me understand :-) going to have a look at your other vids. thanks.

[belibem]

There one slight problem though. JPY was actually going north all those years.

[roslja]

I am glad I get this quality information for free.

I have a feeling that I need to see all youur vids. You really are that good.

[KoalaBearWarrior]

you're the best man! Thanks for the video! I learned a lot!!!!

[jeffreagan2001]

I can't go borrow money at 1%- only the banks can! Carry trade is only for the banksters- individuals are stuck borrowing at a much higher rate.

[ashkanbass]

estimate to be 1.5 trillion $US

[DoBrigh]

yeah but those japanese banks were zombie banks.. full of bad assets not being marked down... propped up by the government.... we in the US arent anything like th.. err... oooh... hrmph

[aidanqn]

More from this guy!

One criticism, though: you seem to be implying that getting people to spend is a good idea. I would like to see you provide counter-arguments as to why it is bad.

[hellahotdude]

r u an alcoholic?

[Netherborn]

If you have lots of money you want that currency to be strong, so you can buy and invest offshore. The only way poor people would suffer if they are totally dependent on import goods...

[fanmusclecars]

Being in the food import business I know first hand what the weak USD has done for us. To make matters worse consumers are unwilling to pay the higher prices leading to cuts in our profit margin. I'm with the politicians and say keep the USD high. 

[Gyrode]

@fanmusclecars I have read articles where it alleged that the Obama's admin strategy is to weaken the dollar relative to many currencies to boost exports. The strategy is an effective one, not spelled out and spoken about in speeches. The Chinese Yuan is offender number one, US manufacturers have wanted the Yuan to fluctuate with market forces for years now.

[freshasdida]

brilliant!

[hiphopsocnroc]

It's OK for the banks to make "money" but when the little people do it, it's "disastrous." Give me a break.

[BlacksAreBeautiful]

doesn't/wouldn't the conversion rate of these currencies come into play?

[Gyrode]

@BlacksAreBeautiful Conversion only matters when you convert back. If your home currency increases in value relative to the foreign currency, you will lose some of the interest rate advantage. For example, if you trade 2 dollars for 1 british pound (I made up the conversion rate), and later when you trade back, 1 british pound gets you $1.75, you lost some money. But you still may be ahead due to the interest rate difference.

[BlacksAreBeautiful]

@Gyrode Ok..I understand you made up the conversion rate, but you just represented a 25% loss and I'm just wondering, what are you putting money in that gains 26% or higher to absorb that loss? essentially I get your overall point though.

[Gyrode]

@BlacksAreBeautiful Certainly, you would need some lucky growth stocks to get that type of return over a short term period. I should have made the conversion difference less extreme. 25% differences can take years to happen. Although certain shocks like the Greek crisis made the value of a dollar go up 7% relative to the euro...which would have hurt the carry trade if you kept the money for long.

[CoWalsh04]

Thank you sir, great video. But I think, secretly the politicians want a weaker dollar.

[mzambo666]

Thank you so much!

[gigijbijbj]

Thank You

[i4Truth]

Your videos are GREAT! Please keep up the good work.