AGE OF CURRENCY WAR

2 ต.ค. 2019

The entire industrialized world is engaged in a form of economic warfare known as inflation.

The idea being that if you can make your currency less valuable it makes your export more attractive for the foreign nations than if your currency was more expensive. So this has to do with fluctuations in currency prices. What you can buy stuff for in your country versus what you can buy stuff for in my country.
The more inflation we cause, the more attractive our exports become to other countries.

If you managed to destroy your economy through regulations, through taxation, through bad management and bad government and you don't really know how to create economic growth to pay for all the special welfare programs like UBI. If you don't have a way to do that through an actual growth, because you hamstrung your economy, how can you get more growth???

The way they do it is through currency inflation. So every industrialized nation in the world has figured this out. Now they all fighting a battle to make their currency as cheap as possible so their exports could be more attractive.

How to create inflation?
Well they reduce interest rates, making bonds less expensive, and then they end up issuing a lot of debt and printing a lot of money. They put money into circulation and they incentivize consumption.
They put extra trillions of dollars into circulation because they know people will spend each penny every single year. It is gonna create a lot of inflation.

They go further. What we see now is governments reducing its interest rates to negative.So if interest rates are negative it is no more reasonable to save money because it is costing you money to just put them in the bank.
If saving money costs you, so you should spend your money as fast as you can and that is what these countries are doing. They are offering things like: negative interest rates on the mortgage to buy a house in Scandic nations. They are trying to stimulate a massive amount of consumption to pay you so you consume.

In the beginning, it sounds like a great idea to you because you can purchase a 100000 home for 95000 by the time you done paying it because you have a negative interest rate.
Over the long term though this is going to destroy an economy because it denies a very simple truth about the time value of money, about the way economics works. If they are manipulating the system for short term benefits it will end up crashing us.

If interest rate is a price of money just think about it: if someone is paying you to take money from them, what does it tell you about future value of this money???

I will stop here.

I will be happy to know your thoughts on a current situation. Feel free to share in a comment section.

3 ต.ค. 2019

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