A little something I've been working on

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Re: A little something I've been working on

Postby Jove N. Ore » Sun Jun 17, 2012 3:46 pm

By that do you mean when the government is running a surplus? That would almost likely lead to a recession, unless the government was a net exporter and those countries it exports too are still growing.


I mean a surplus.

But we will be incredibly poor, nobody would want to trade with us if all he gets is our worthless currency, our citizens would try to move out, and, since our military isn't getting paid either (with money they can use to buy food with), we'll soon be out of power and possibly dead.


That is empirical. There are a few examples in history such as with the Nationalists in China. One of the reasons they had their demise was because there currency was worthless and troops were thus being paid practically nothing, so they deserted.

I forgot to mention that a lower value of currency makes it easier to export, which in turn allows you to accumulate foreign currency reserves, which in turn allows you to purchase what you need with those reserves. Furthermore, I should have made it clear that the exchange rate is determined by the foreign exchange market, not by your domestic rate of inflation.


That may be seen today in China. Obviously they are big exporters (even though most of their GDP is from investment), and thus when their currency began to grow in value against other currencies it began less beneficial to export. Anyone who is interested in the modern world should know what you just said (unfortunately many people are not interested in todays global economy and thus do not even know one thing about basic economics).
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"The government's might is not always right." - Jove N. Ore

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