The Exchange Rate is an international market which decides how much a currency is worth, and exchanges from currency to currency, allowing you as an American to buy as many Turkish prostitutes as you want, because they only cost about $3.67 USD.
The Foreign Exchange Market is one of the world's largest, with over 3.2 Trillion USD worth of currency changing hands every day. Now imagine if just one percent of that money changed hands, and then slipped into your duffel bag under the counter. In 15 months, you would be worth as much as North Korea (assuming that you used to be worthless), but without a communist Uncle Sam to take it from you.
"Take 1.5%. That's real business sense."
In all honesty, the Jews never decided the rate. This is how it is actually decided: when a person walks up to the counter, requesting an exchange of currency, the teller must calculate the exchange rate, then convert from one currency to another, essentially swaping your money. When she is actually calculating the rate, an intense, no-holds-barred wrestling match is happening in the back. The two representative countries (or three, or four) duke it out in a battle royale, to see who deserves the best rate. The rate is calculated from a combination of the odds of winning, the win or loss per country, the total in betting per country, and how damn sexy the countries look in tights.
Pictured: The Foreign Exchange in Black/White, USA on left, Germany on right, Greece on floor.
The "Free Market" is a term coined by Adam Smith which refers to the forces of economy. In this sense, countries dictate their own value based on how much money they are worth, how much debt they are in, how much civil war they are fighting, etc. Smith refered to this force as the "invisible hand", which brings a visual of a ghostly pedophile.
"...Saying how many dollars yo' ass is worth!"
The market forces of supply and demand determine how much a countries' currency is worth, no matter how much we like to believe countries throw on the gloves and duke it out. It's kind of like a boxing match, but with imports/exports and production. The most valuable currency is currently the Kuwaiti Dinar, which is worth about 3.44 USD.
Probably because of that amazing mustache.
Article by Tim McGrath