The Google Wallet Concept - Assignment Example

The high level of debt of the United States government has occurred for a variety of reasons and the government is the party most responsible for the credit debacle that the U.S. faces. The involvement in war conflicts has cost Americans trillions of dollars. The overall level of debt of the United States has skyrocketed since the War on Terror started after the 9/11 attack. There are other factors that are increasing the level of debt of the U.S. government. Three factors that are increasing the level of debt in America are budget deficits, a lack of savings, and trade deficits.

A trade deficit occurs when a country buys more than it sells. As of 2007, the total debt of the United States was $8.7 trillion (Youtube). If a new currency called Google Bucks appeared in the market I would probably be interested in owning the currency. The reason that I would be interested in Google Bucks is that I make a lot of online purchases. I would accept Google Bucks. I think that Google Bucks could be considered a form of money because it can be used to buy goods and services. The problem with the form of currency is gaining acceptance from the general public.

Most people would not consider Google Bucks money if they cannot use the online currency to buy goods outside the internet. A way to legitimize Google Bucks is for the currency to be converted into U.S. dollars or other currency through ATM mechanisms.China benefits from the linkage of its currency to the dollar because its currency does not have to face competition from other currencies to keep its value. The Yuan does not have to compete in the foreign exchange market based on the internal economic conditions of China.

China prefers to peg its currency and let the stable dollar become its shield to protect its economy. The United States benefits from this relation because China has become one of the top importers in the world due to the fact that the purchasing power of its people is rising. When the value of the dollar goes down the U.S. reaps the benefits of more Chinese people buying goods from the United States.