W A R N I N G !

W A R N I N G !

This page is full of non-facts and bullsh!t, (just like the internet and especially forums and other blogs), please do not believe entirely without exercising your intellect. Any resemblance to real things in reality is purely coincidental. You are free to interpret/misinterpret the content however you like, most likely for entertainment, but in no case is the text written on this blog the absolute truth. The blog owner and Blogger are not responsible for any misunderstanding of ASCII characters as facts. *cough* As I was saying, you are free to interpret however you like. *cough*

Thursday, August 25, 2011

[Flipside Week] Strong national currency is bad? Yea rite.

A strong currency is said to hurt the nation's competitiveness. The reason given is that the exports are now more expensive to other countries.

So there will be less demand for the nation's exports. So less jobs for the people.

Is that a bad thing?

Yea rite.

Why does a country export stuff in the first place.

Because other countries want them.

There are two cases why other countries would want a nation's exports -

1) The export is unique to that nation, or
2) The nation sells it cheaper

In the first case, we have a monopoly scenario. So price is still set by the country (or the company in the country). If the country wants, it would be easy to reduce the price of the export. IF the country wants.

In the second case it is closer to a fully-competitive market scenario, where everybody has the ability to produce the same thing, so the guy with the lowest cost sets the price to become the lowest and wins ...until the cost of production to produce any more becomes too high and matches market price.

And a country's currency strengthening is a sign of it happening. Too much demand, price of currency goes up.

Which is actually not a bad thing either - since economics is supposedly the natural way of balancing things, so the nation is not getting less competitive; it was actually getting underpaid previously. And getting underpaid is bad.

And, if you want the value of your currency to drop, just import more to make the trade surplus into a trade deficit. U.S.A. style. Spend more, enjoy yourself. Even if you do not get paid in cash, I don't mind being paid in Core i7's.

Don't forget, if a country's currency is strong, the imports become cheaper. So spam imports, especially if this nation imports everything.

So, everybody buys more stuff and lives happily ever after.

Wait... you're telling me this is not the case?

Because the prices and hence spending power locally remains the same? Despite imports becoming cheaper? And despite less manhours being available for work due to less demand due to it becoming more expensive?

Well that is the economic problem the top tells us about. But you know what, screw it. It happens only because the people up there are hoarding all the money.

And since the money does not go to you anyway, they prefer higher production. More exports. You ain't gonna get the benefit either way.

So, a strong national currency is bad. For those at the top.

As with every financial bad news. They affect the super-duper-rich more than the common people. Same goes for the financial good news too. Frankly, the past few years with the crash and recovery, I never felt anything. One thing did change within the few years - inflation. And that happened during the recovery. Inflation happens when there is more money.

So the policies are often meant for the super-duper-rich only too. So now you know why the big shots seem to always do things unfavorable to the majority. Because it is good for them. And because they can.

So, ignore those BS, all the news and idealistic theories get unrecognizably corrupted by the time they reach the ground. The reasons given for the incessant price increases are a good example - there are no reasons.

One thing is sure - online shopping is cheaper.

And that is certainly not a bad thing.

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