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How is the currency of any country valued ?

leggy — Mon, 08 Mar 2010 14:19:47 +0000

Zulius asked:

I am trying to understand the macroeconomics of currency-value its relation to housing and growth of a country and to the world’s economic development and what impact it can have on the world. In short there are lots of questions to follow but the first question that i need answer is “How is the currency of any country valued ?”.

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Is the Worldbank calling for an audit of the federal reserve ?

leggy — Sun, 07 Mar 2010 23:21:46 +0000

Al asked:

I’m hearing no countries want to trade in dollars, including china and other countries are demanding other currencies outside of the euro also….. Do you think the implications of this will be the collapse of our country and economy ?

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Is currency trading a good viable field to get into?

leggy — Sun, 07 Mar 2010 06:38:48 +0000

Metawaii asked:

I’d just like to hear your opinions on currency trading and need a good beginner book/website to read.

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Would tariffs compensate for China's currency manipulation?

leggy — Fri, 05 Mar 2010 09:59:31 +0000

Cheer Up asked:

China is controlling its currency exchange rate by law. They force their currency to be lower than the free market equilibrium level, which is causing economic distortions and inefficiency by interfering with the free market.

If we put a tariff on Chinese imports, this would make the price of Chinese imports go up, which would be moving closer to the natural free market price.

So in this case, higher prices would actually improve the economy by moving prices closer to the real free market levels.

And don’t tell me tariffs failed in the past. The USA had tariffs on imports throughout the 1800’s, and tariffs made the USA an industrial superpower and a creditor nation by 1914.

Tariffs gave us prosperity.

Free trade has given us economic collapse.

I think it’s time to give tariffs another try.
Alby, the EU has already had to do that with China. They put a punitive tariff on China’s imports, and now China is protesting to the WTO. Problem is, the WTO already approved the tariff because China was dumping products in the EU (selling below cost).

So what if China puts a tariff on our exports? They don’t buy squat from us anyway. Boeing has plenty of other customers. We would gain more jobs than we lost.

Don’t you believe in the free market? Tariffs would undo China’s restraints on trade and move us closer to the free market prices. Isn’t that what we wanted? Free markets?

Why is it bad to restrain trade only if we do it?

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So,the reason we went to war with Iraq is really because they were going to stop selling oil in the US$?

leggy — Wed, 03 Mar 2010 20:58:40 +0000

Curio asked:

I guess Iraq supposedly was telling us they were going to start trading in Euros instead of USD!
Why did the Bush Administration not just introduce a new competing currency instead of going to War?
AZ…I am asking a question, how does that convert to a belief? This is a dialog not a statement of belief!

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Through the global recession, which currency has devalued the most against US dollar?

leggy — Fri, 26 Feb 2010 17:59:02 +0000

dave d asked:

In the past say, 6 months, which currency in the world has taken the biggest beat down against the dollar? I ask because I never planned on going to Iceland because it was always so expensive, yet I always wanted to go, and it’s looking much more attractive now that the $ has gained %60 value against the Icelandic Kronor. What other currencies are heavily devalued against the dollar? Anyone who’s got money should look into traveling right now!

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How serious do you think the talk at the UN and in China of a new world currency?

leggy — Thu, 25 Feb 2010 15:34:51 +0000

The fed up matthew™ asked:

http://www.cbsnews.com/blogs/2009/09/09/taking_liberties/entry5298305.shtml

The United Nations would like the dollar, euro, yen, and other national currencies to be succeeded by a new “global currency.”

That recommendation appears in a U.N. report released this week, which suggests the dollar’s outsize role in international finance has ended — and says that it’s time to invent a successor currency that would be managed by a “Global Reserve Bank.”

Countries could “agree to exchange their own currencies for the new currency, so that the global currency would be backed by a basket of currencies of all the members,” says the 218-page report from the U.N. Conference on Trade and Development.

Keep in mind that this is a U.N. report written by bureaucrats without any actual legal ability to create the global equivalent of the Federal Reserve. Anyone who remembers how a U.N. agency once called for a global e-mail tax of one cent per 100 e-mail messages — but didn’t exactly get it — can attest to that.

The U.N. report grew out of the financial problems that swept the world in the last year or two, which it diagnoses as arising from too much speculation in commodity markets, a bubble in stock markets and housing markets, and trade imbalances between countries like China and the United States. Its prescription? “More stringent financial regulation” and “diversification away from dollars” as part of a new system of constant exchange rates. (Supachai Panitchpakdi, UNCTAD’s secretary-general, also wants “vigorous” global actions, including “managing” energy prices through taxes, to dramatically cut greenhouse gas emissions.)

The diversification-away-from-dollars idea is a close cousin to what the Chinese government has been saying recently. China, of course, can now claim the dubious honor of being the largest foreign holder of U.S. Treasurys worth a total of $776.4 billion as of June 2009. According to a U.S. government report from 2007, China was the top foreign owner of Freddie and Fannie bonds too.

One aspect of the U.N. report that stands out is that, in all of its 218 pages of analysis and charts, it doesn’t seriously contemplate a new currency that’s based on something other than paper money, which can be devalued as fast as governments can run their printing presses or add zeros to their banknotes. The two classic options are gold and silver — which are resistant to governmental inflationary urges — though I prefer economist David Friedman’s suggestion of a bundle of commodities. Then again, returning to money that’s backed by something tangible may not require the ongoing services of an entire U.N. bureaucracy.
Sorry I meant–How serious do you think the talk at the UN and in China of a new world currency IS?

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are carry trades not an almost guaranteed way to make money?

leggy — Thu, 25 Feb 2010 01:07:13 +0000

John M asked:

if you borrow in a low interest rate currency, such as the yen and convert it into a currency with a high interest rate, such as british pounds, is that not a guaranteed way to make money, as long as you can be fairly sure that there will not be a massive change in the exchange rate.

i know that theres no such thing as risk free profit, so i was wondering what the catch is to doing this, as i cant see it.

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Could society function without currency?

leggy — Mon, 22 Feb 2010 07:23:15 +0000

Jimmy J asked:

We all base our lives around making these paper-wannabe bills, but is there a different way we could function? Would we set up personal trades like they did in small communities? No, because we have a large population. Could we set up a communist-type society where we trade with other countries for their resources with our resources and give out a sort of rationing that people would work for by harvesting our resources? What would that rationing be? For freedom, we’d have to be able to get whatever we wanted with our rations. But isn’t that currency?
Any ideas on a society without currency and how it would work with our massive populations?

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New Chinese booming economy a threat to Japanese security, as well as international security?

leggy — Fri, 19 Feb 2010 11:43:45 +0000

MXG asked:

New Chinese booming economy a threat to Japanese security, as well as international security? With an increasing surplus of capital it has kept its military financing quiet, as well as maintaining a low currency value through manipulation. Any conflict with China would hurt out economy, but to what extent, seeing as how China isnt even our 1st or 2nd largest trading partner. And I doubt China will fully mature to a robust country people are afraid of, after all many of its own policies are hurting it. It is starting to look more capitalist, and less of a socialist country, they even try to deny it, and call it “Communism with class”. I wont even talk about its high human violation rights. A recent article I read regarded China low enforcement against piracy which is hurting Chinese economy. Many Chinese software companies tried to compete with there American counter-part but have faltered due to its unprofitability, since China is infamous for its pirated materials.

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