Is Socialism Better For Currency Value?

Discussion in 'Politics' started by ZZZzzzzzzz, Feb 27, 2008.

  1. I merely merely responded to your question in the manner you asked it...meaning to say if you need translation that your question was completely irrelevant and worthless.

    You consider someone asking you "How long you have been a homosexual" vulgar?

    Fascinating...

    Your strong superiority complex is showing...

     
    #11     Feb 27, 2008
  2. sorry sir, but I ask you that question because i intended to explain to you the value of the usd against other european currencies like the deutchmark (the former Euro) since we left the brentwood pact. And since everyone is aware of that, I thought you were younger based on the original question in this thread.

    Your response demonstrates your level of education.
    never mind, A strong currency is NOT always good in a economy. and the USD was stronger than the deutch (the original euro) until GWB.

    the question is not vulgar. you response IS
     
    #12     Feb 27, 2008
  3. "never mind, I strong currency is NOT always good to a economy."

    "I strong currency"...nice.

    LOL!



     
    #13     Feb 27, 2008
  4. IS not.
     
    #14     Feb 27, 2008
  5. A weak dollar is good for the economy as it promotes exports (reducing unemployment), while discouraging imports.

    A weak dollar may help ease the housing slump, as home prices will come into equilibrium faster.
     
    #15     Feb 27, 2008
  6. Right... And the weaker the dollar the better it is for the economy. It worked out so well for Germany in 1923 when their currency collapsed, it worked out great for Argentina a few years ago... the economy is usually booming when the country's currency is not worth the paper it's printed on.

    Never mind the fact that the only thing we export is middle-class american jobs, we're not producing anything anymore so we can't export things even if we wanted to. Our huge trade deficit speaks for itself.
     
    #16     Feb 27, 2008
  7. A weak currency is not bad for a economy, a destroyed/unstable currency is bad, And the US goverment is destroying the USD.

    During the sixties, the exchange rate between the DM and the greenback was fixed at a price of 4.00 DM, which helped the German industries gain world market shares. In the seventies, the greenback declined to an exchange rate of 1.80 DM. The politics of high interest rates under the Reagan Administration put the dollar to an exchange rate of 3.45 DM in 1985. During the first Clinton Administration, the greenback declined to 1.38 DM.

    The exports to the U.S increased rapidly since the beginning of the Euro's decline in the 90's. German car manufacturers, like Mercedes-Benz, Volkswagen, Audi or BMW have seen up to a 50 percent increase in their U.S. sales. Although some of the models are made in Mexico (VW) or in the U.S. (BMW, Mercedes-Benz), most of the cars are still imported from Germany. According the figures of the federal statistics bureau (Statistisches Bundesamt), total German exports rose up to 18.9 percent in the first six months of this year, From the economic point of view, the weak Euro (and deutch) had more positive effects on German economy than negative ones after the 1948 reform.

    By the 1920's Germany was a small state isolated from the rest of the world, a pariah nation of sorts following World War I. As a result, it had a difficult time finding a market for its government bonds. German deficits had to be financed internally -- a difficulty which greatly accelerated the printing of fiat currency. In fact, By mid-1923 workers were being paid as often as three times a day!!!.

    When the government needs more money than its people are able or willing to lend it, it monetizes the debt. That is what happens in this country (and in europe) when the government runs a big deficit. The Federal Reserve (our central bank) "buys" as many bonds as necessary to stabilize the market. It prints money on the security of these bonds. Despite the facade of the government supposedly "borrowing," the net result is the creation of printing press money. (Actually these days the money is created in the form of new bank deposits--checkbook money--but the net result is exactly the same as if bills were printed.)

    This is what happened in Germany. The government issued notes which were promptly discounted by the Reichsbank, i.e., the bank issued money on the "security" of these worthless notes. To compound the evil, the bank failed to raise its interest rate sufficiently. Businessmen found it very profitable to borrow money from the bank and buy up goods, shares and companies. Their debt was wiped out within weeks by the rapid inflation, and the businessman remained holding the valuable assets he had bought. The net result was a huge "private inflation" caused by the rapid expansion of credit. Even foreign exchange was bought with borrowed money, so that the Reichsbank actually financed speculation against its own currency. Yet the bank refused to raise interest rates, arguing that this would only add to the cost of business and thus would increase inflation!

    The tax system virtually broke down. Businessmen found that by merely delaying tax payments, the depreciation in the mark would virtually eliminate their true value. But the government, lacking adequate income, felt forced to resort more and more to creating money.

    in December 1923, the Reichsbank had issued 496.5 quintillion marks, each of which had fallen to one-trillionth of its 1914 gold value. The US dollar was quoted at 4.2 trillion marks, the American penny at 42 billion marks.

    Immediately after the war the German government, under the leadership of the Socialist Party, embarked upon heavy expenditures for health, education, and welfare. The demands on the treasury were extremely heavy anyway because of demobilization expenses, the demands of the Armistice, the disorders of the revolution, and the staggering deficits of the nationalized industries, especially the railroads, postal services, telephone, and telegraph. Public administration by the new men raised to power by the revolution, nevertheless, was extravagant, as the resources made available by the creation of new money were apparently unlimited. A number of measures for the nationalization of certain industries (e.g., the coal, electrical, and potash industries) were introduced, but failed to become law. The eight-hour day was enacted, and labor unions were given many legal immunities and privileges. In fact, a system of labor councils was set up which authorized the workers in each enterprise to elect representatives who shared in the management of the company! While government expenditures rose by leaps and bounds, the revenue suffered a gradual decline until, in October 1923, only 0.8 percent of government expenses were covered by tax revenues. For the period from 1914 to 1923 scarcely fifteen percent of the expenses were covered by means of taxes. In the final phase of the inflation the German government experienced a complete atrophy of the fiscal system.

    The worldwide inflation that is engulfing the western world now springs from similar doctrines and theories. There is no Treaty of Versailles and no reparation payments that can be blamed for the present inflation. But in many countries of Central and Western Europe the responsibility for monetary depreciation is squarely laid on American balance-of-payments deficits that are flooding those countries with US dollars. While European monetary authorities are actively inflating and depreciating their own currencies — although at slower rates than US — they are pointing at the US balance of payments as the ultimate cause of their currency depreciation. As in the German hyperinflation, foreign intrigue and artifice are said to be at work again.
    American politicians are quick to lay the blame for US difficulties on foreign intrigue, especially that of "the Arabs." Since the formation of the oil producers' cartel and the significant boost in oil prices, US balance-of-payments deficits and the dollar weakness in foreign exchange markets are charged explicitly to the Arab countries.
     
    #17     Feb 28, 2008