Word problem, US dollar and China Yuan
This is not a formal word problem in the sense that I stumbled upon it in a text book, but rather a discussion between myself and a friends parent.
The context of the word problem is as follows. Currently the US has a very large deficit with most of the debt being owned by China. The parent stated if China were to stop deflating its own currency, and raise it so its worth more, the actual debt we owe in China would shrink.
I have thought about this and tried to work it out but Im not sure if im doing something wrong or if my friends mom is incorrect.
(Im not sure how to set this up correctly, nor the proper questions to ask)
As of 10/17/2009
1 Yuan = .1464 $ (usd)
1 USD = 6.8285 ¥ (yuan)
Lets say China owns $50,000 of total US debt.
I fail to see a scenario where USD debt would shrink from a strengthening yuan.