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Demand Better: A Stable and High Canadian Dollar
YouTube video here:
http://www.youtube.com/watch?v=RShdVQVgTHg
Dollar Facts:
1. The Canadian Government takes in little to zero gold in taxes.
2. The Canadian budget calls for at least 3400 gold in alliance dues, training wars, printing costs and MPPs in the course of one month.
3. In order to buy 3400 gold, the Canadian government must pay $103030 on the monetary market
4. Derek Harland and Banach support lowering the Canadian dollar if elected as President.
5. If we lower the dollar, it will cost us between $14000 - $33000 extra to do the EXACT SAME THING.
6. If we lower the dollar, the money you make every day will be worth less.
7. If we lower the dollar, the money Canadian businesses make in Canada every day will be worth less.
8. Exporters will ONLY make more profits when the dollar is lowered IF everyone’s wages do not go up to compensate for the dollar’s weakness.
Conclusion on a lower dollar:
Hurts the government, hurts you, hurts Canadian business, to possibly kinda help exporters, if they’re lucky.
What we need:
A STABLE CANADIAN DOLLAR
How do we get a stable Canadian dollar?
Easy. Government gold and CAD reserves and a Prime Minister with a crack economic team.
How do you get that?
Voting Jacobi on December 5.
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first and agreed
what i see here Jacobi is an article in which you present a thinly disguised attack on Banach and Derek and try to pass it off as a legitimate campaign. If you look at the ratio of constructive comments to ones meant to persuade people to dislike your opponents, its pretty easy to see what your goal is here.
If you want to do something childish like this at least give us a better explanation of what you intend to do besides "Government gold and CAD reserves and a Prime Minister with a crack economic team."
I expect better of you Jacobi.
Jacobi ftw.
Agreed. Jacobi ftw.
<a href="http://www.erepublik.com/en/article/csd-and-the-presidenatial-election-847522/1/20" target="_blank">http://www.erepublik.com/en/article/csd-[..]1/20</a>
nuff said ;p
~hyuu~
Jacobi. All you have said is told us that a stable dollar is good. You also took some of my ideas (which I used to correct you in your previous article), but nevertheless stating the obvious is no great "discovery".
I think you haven't the slightest clue about economics. Your one of the biggest fails as a PM when it comes to the economy. I've lived through 4 months of horrible finance management, and god forbid we have to go through yet another one.
I agree with scorp, give us a fking explanation first. Stating the obvious (and especially using tips learned from previous articles), won't get you nowhere.
wow
Fair dues Jacobi, the ad is solid.
Perhaps a suggestion: graphics. If you have the time/resources to have some slick, stylistically-integrated graphics to support your points visually it would do wonders to keep your message in people's heads
Yeah, you should really consider taking political pointers for your platform from Octavian F, the know-it-all of seemingly any topic at hand whenever it suits him. After all, look how far his platform got him in the last election-- oh, wait...(dead last).
I demand butter!
Octavian...I um.....I don't read your stuff
@Mr.Mesmer: I started campaigning a few days before the election and thus was only able to convince one party to support me. The party that supported me had 36 members, and yet I got over 80 votes. I think I did quite well given my situation.
And my arguments against Jacobi are well founded and easily backed up by all the proof you'd ever want. I'm not saying his current adversaries are any better, but Jacobi isn't a whole lot better either.
And what do you mean by taking "pointers".... oh wait, I know! You mean I should also include stuff like this: <a href="http://www.erepublik.com/en/article/i-octavian-f-also-have-a-poltically-motivated-annoucement-to-make--1041876/1/20" target="_blank">http://www.erepublik.com/en/article/i-oc[..]/1/20</a>
This is one area where we disagree. The strong dollar is hurting Canadian companies and encouraging our dollar to migrate to other countries. We need a balance and I do not think we have reached it.
@Jacobi: Yeah I know, I hear you don't like opposing views or criticism too much. I like you're style Jacobi. You're exactly what a stereotypical politician should be like.
Nice words, no substance, and unable to answer to any arguments (moreover you refuse to even read them). Bravo!
I'm starting to think Scorpius might be alright.
I disagree with you.
And my crack team of economic advisors is better than yours.
Next
@ Caesar and Banach
Why do you disagree? What is there to disagree on?
What evidence is there that Canadian business' are struggling because of the high dollar?
The high dollar could only conceivably hurt exporters, but our real gold wages are about international average and we have among the lowest diamond prices in the world.
What is really hurting exporters is two things
1) Canadian companies are, on average, younger and so are not as high quality as foreign companies...this means that they are at an efficiency disadvantage on foreign markets
2) Canadian workers are more youthful than foreign workers, so their skills are not as high when they do work. This means Canadian companies are at a productive disadvantage.
We can't do anything about the second point, but we can, as a government offer grants for business owners to upgrade the qualities of their resource (specifically wood and diamond...maaaaybe oil) companies. This would make their companies more efficient and more competitive on the world market.
"2. The Canadian budget calls for at least 3400 gold in alliance dues, training wars, printing costs and MPPs in the course of one month."
The American budget calls for about the same thing -- oh, wait, that's 3400 gold in a month? Not a week?
...
Nevermind.
In any case, you can only print so much CAD before you badly devalue it and stop making so much of a profit off of it...
No Jacobi, those ARE NOT the main problems our economy faces.
In case you've never heard of this word, its called "over saturation", as in, there is a small demand, but a great supply in our markets. And I dunno if you heard yet, but its kinda becomming a global issue.
Moreover, our tax system is flawed in both domestic tax policy, and foreign tax policy. And thats a BIG problem. I just wanna see if you can figure out why.
And third, the two points you posted are so insignificant it makes me laugh. Ok point #1 is slightly relevant, as in it is wise to for our government to give out loans to help business prosper, but it was not the cause of our crisis.
P.S. The idea of the loans, yeah, you got that from me too. Ciao.
I'm an exporter and the relative strength of the dollar doesn't mean that much to me since you have to price in gold. What does hurt is any instability in the currencies. A higher dollar should be better for the government. Over saturation is very high in the marketplace driving down margins and bankrupting many. There shouldn't be any reason for the govt to grant funds until the new economic module is released.
Canada is so much more than this.
I own a business myself - actually two business and I administrate a further two as well. That's a total of four, so I have the experience to understand where our true issues lay (it's certainly not import taxes). The high dollar is hurting our businesses and the inflated wages are furthering the problem.
I believe a lowered CAD will solve a number of problems at once. It will help to create the strategic reserves you have called for and which I agree must be created to prevent another catastrophe. It will help our exporters, but also all other businesses as well by ensuring Canadians spend their money in Canada, not in North Korea or Finland or - God forbid - Hungary.
I believe a detailed analysis is necessary and I believe the lowered CAD will come out on top as the most beneficial economic theory.
Caesar, how can lowering the value of the Canadian government's only income make a strategic reserve of gold? It would mean very plainly that it would take more of what we have to make gold. That won't help us save gold!
You might believe the lowered CAD will solve a number of problems at once, but saying that our high dollar hurts businesses doesn't make it so.
Where is the proof that people in sufficient numbers to be economically relevant are going overseas? Where is the proof that it is meaningfully hurting exporters?
And, even if it was (which I am not saying it meaningfully is), where is the economic incentive to penalize every domestic producer for the very small benefit of international producers (plus penalizing every Canadian by lowering their real value wages, plus lowering the government's purchasing power).
I've illustrated the value of a high dollar using real numbers, very plainly. Those who favor lowering the dollar need to point to more than just intangibles.
Jacobi, first off, I am disappointed you resorted to an attack article on Banach and I. After that, I think you are looking at the wrong ways of why Canadian companies are having difficulties making money.
You say that eCanadian workers and companies aren't old enough and don't produce as much as foreign workers. I think the main reason some companies might struggle is the oversaturation of the markets. Prices are constantly being dropped and it is hard to turn a profit with a company when prices are so low. Which is why companies resort to exporting to make a profit. This is why I think a lower dollar will be beneficial. However, I am not going to make the decision by myself. It is a critical decision to decide that so I will make sure my economic staff consults the decision and advises the government on what to do with input from myself as well. Once that is decided, it is important to stabilize the dollar and maintain its level.
As far as the government having to spend more CAD, I think the government should be spending a little less gold and saving more of it. I applaud William Duncan for helping our allies and preventing imperialism and I will continue to uphold these policies but there could be less gold being spent by the government which will translate to the government having to spend less CAD to get the gold.
vote
A more valuable currency only benefits us as a country in my opinion.
Although I disagree with many of your policies and actions Jacobi, you are 100% right on this issue, which may result in my vote come election time.
I admit that I am no economist and this is why I would make sure my economic panel would look at the disadvantages and advantages of a higher dollar vs a lower dollar and make a smart decision. There are advantages to both and thanks for responding Jacobi. I understand your position on this issue and it will be a decision that is very important no matter who is elected. That is why I will make it my first priority to work with advisors and make a decision on this policy issue.
That was a bit too well said.
Agreed...
Gold < Policy.
You know better Jacobi
Stop pandering to populism.
I actually agree with Jacobi on this one....and how is this an attack article...I fail to see anything resembling that at all.
PS- Scorpius--"Le Sigh".....
I completely agree Jacobi, a high and stable dollar is a necessity for us. I'm still considering my vote as William Duncan and his team have been doing a good job slowly raising our dollar to the second highest in the world, but I wish you luck in the election.
I was wondering when someone would bring up minimum wage as the CAD in devalued..
There was talk of depreciating the CAD to .04 / gold.
That would require (maintaining the same wage / CAD formula) increasing the minimum wage to $2.00 - not exactly great for GMs.
this article makes no economic sense at all. Short 'reasoning'
No argumentation. Not to mention that some of the statements are totally wrong.
in short FAIL
What is really hurting business is the inflated cost of labour in eCanada.
For example level 4 manufacturing worker in Canada, wage rate $8.50 per day -converted to gold = .28 gold per day
Same worker in the eUS $6.40 per day - converted to gold = 0.16.
Wage rates in Canada are 75% more expensive than in the US. Raw material costs are the same (assuming that the company in question purchases from the global market). The ripple effects on produced goods cost is obvious. The lack of competitiveness in the biggest market in the eWorld is obvious.
My question is how is monetary policy going address a chronic labour shortage?
So Presidents, former Presidents and wanna be Presidents your 2 cents (converted to gold of course) worth please.
Demand better? How is the status quo, without any effort to see what can be improved better?
If you are correct, Jacobi - and I don't believe you are - then we should be seeking to make $1 CAD = 1 gold. Look at all the savings the government would have!
For the record, I disagree. Congress is seeking to maximize our economy, not remain stagnant. We also look for a stable dollar, but at the best value for everyone - citizens, business, and not just the government.
Citizen B
@Kitahoshi
Right on.
And regarding the lower dollar helping exporters, don't most countries have extremely high import taxes anyway.
And furthermore, new companies wouldn't have export licenses right off the bat, so a lower dollar doesn't really help them, does it.
And if I were going to start a company anywhere, unless you're a true patriot, you'd just move an organization to wherever the lowest tax rate/lowest wage/highest demand for your product.
likewise, if Canadian workers are looking at the bottom line, they can make more working elsewhere. Lower taxes in some other countries PLUS a higher wage rate (when converted in gold equivalent). That's why low skill workers/new players will stay in Canada if they can't move, but not the higher skill ones, unless extremely patriotic. For me, I'd only come back to fight a war, but otherwise no.
CitizenB, I enjoy slippery slope arguments as much as the next mongoose, but $1 = 1 gold is 30 times more than what we are debating and wouldn't be sustainable. The government would be able to sell Canadian at that price because there would be no economic indicators to justify the CAD being so high. We have a high currency mostly because we are the 6th largest exporter in the world. All the other major exporting countries have high currencies because exporters put their gold on the market when they've converted weaker import currencies into gold.
If the price was at an unsustainable value, let's say 0.04 or 0.05, there wouldn't be enough gold on the market and CAD would drop as CAD sellers lower their price to something sustainable.
You see the same thing in any product. I could make a union and all my q3 brethren could sell our food at $3.50 or $4. We could but there is little demand for it so we lower our prices to a sustainable value.
We know that the CAD would continue to rise without government intervention because our exports are too strong (raspberries to all those "woe is me" exporters). You are proposing an extremely artificially low currency that isn't supported by a country with higher exports than the US
I like to follow evidence, Jacobi has made a very clear case for maintaining a strong/stable CAD based on government costs among some weaker (i.e not as quantitatively based) arguments. Yet the opposition is seemingly unwilling to produce a coherent, quantitatively based reason why exporting is better. While the theories sound quite plausible and dandy, many pet theories of politicians and economists alike get discarded when faced with numerical evidence.
I am not saying I agree with Jacobi, I'm saying the opposition needs to use some facts in their arguments.
STRONGER MONIES!
@Kitahoshi: LOL if you're gonna direct a comment at me, at least say it. And apart from the fact that you have your own (foolish) opinions about things, you haven't said anything important. And by important, I mean contradicting any economic policies/ides that I have suggested.
And politics includes debating. And sometimes, people like me need to make a few "nasty" (as in I disagree) comments in order to expose fools who don't know what the fk they're talking about. Especially if those fools fked up a nation for 4 months and now they want to have another go at it. Its not hello kitty adventures, and its not pretty. Its politics. Get over it.
P.S. Jacobi doesn't know what the word "economy" even means. He does know however, what "image" is. And frankly, given people like you, its working well for him.
So what are YOU going to do to stabilize the dollar? I see a lot of complaining but not allot of progress.
@Liam Crowley: Wait a week or so until I publish my platform. I'm sure you'll all like it.
Just so we're all clear on who knows what the word "economy" means...
Jacobi received a BA in Political Science.
Octavian has not yet completed high school.
jus sayin' ; )
@Saltydog: Lol yeah thats the funny part. A 17 year old highschool student seems to find better solutions for the economy than university grad who can't even understand economics in a simply game.
However, I do plan to attend Canada's #1 business school. I'm not so sure what school Jacobi attended...
The Mongoose School of Political Science?
"You are proposing an extremely artificially low currency that isn't supported by a country with higher exports than the US."
False:
USD - 0.025 (40 USD = 1 gold)
RON - 0.019 (52.63 RON = 1 gold)
FRF - 0.025 (40 FRF = 1 gold)
NLG - 0.016 (62.5 NLG = 1 gold)
RSD - 0.016 (62.5 RSD = 1 gold)
PLN - 0.025 (40 PLN = 1 gold)
HRK - 0.017 (58.82 HRK = 1 gold)
IRR - 0.026 (38. 46 IRR = 1 gold)
BRL - 0.027 (37.04 BRL = 1 gold)
Citizen B
Banach, MY crack team of economic advisers have more plans to stimulate our economy. They are also high on crack.
Tyrone Biggums is my MoF
Printing money is just another form of taxation, and one used in desperation
I agree with you Jac, but that isn't the only thing we need to repair with this country's economy.
See me about what we can do.
Here are the top 6 exporting countries in the world:
Spain 0.031
Russia 0.035
Ukraine 0.028
Greece 0.03
Hungary 0.03
Canada 0.033
In total, we export 283 gold and import 229 gold, a trade surplus indeed.
I am a mongoose :>
"The government would not be able to sell Canadian at that price because there would be no economic indicators to justify the CAD being so high."
My apologies, didn't put 'not'. But generally speaking, debating $1 = 1 gold is like me saying "if a lower currency is good, why don't we make ours $1 = 0.001?" I'm giving the benefits of 0.033 or 0.032, just as surely as you will probably eventually give the benefits of 0.025 or 0.028. I won't ask you to justify 0.001 because you're not suggesting that, hopefully you won't ask me to defend something I'm not suggesting either
"In total, we export 283 gold and import 229 gold, a trade surplus indeed."
- We can do a lot better with resulting benefits to all Canadians.
"debating $1 = 1 gold is like me saying "if a lower currency is good, why don't we make ours $1 = 0.001?"
- Again, you have not answered the argument I have presented you on a silver platter. If 30 CAD is good, what is wrong with 25 CAD? Lets see some real facts & figures to back it up. I am a little concerned, Jacobi, that you are simply grandstanding to support your presidential bid next month. Pick a topic that you know a lot of Canadians don't understand and attack it. We are friends, and I have supported you strongly in all of your past election bids. But I believe you are wrong here, and in spite of our friendship, must disagree.
Citizen B
quote from myself @ ecanada forum: 'To get gold you have to sell your currency. Thus create demand for your currency. A high currency means lower prices means less demand for cad means that the monetairy offers sell slower.'
Argh, I answered that already.
0.033 is demonstratably below actual CAD value (without government interference the CAD would continue to rise.) 0.04 might be below the tipping point, but it may not. 0.03 was definitely undervalued because of how fast it went up without regulation. For sake of STABILITY I don't want to go higher because of the size of reserve needed to maintain the CAD at such a high level. and for the sake of CAD printing I also don't want to go very high. As we all know, the government needs to sell CAD on the market to purchase gold - it is limited by the gold available on the Canadian market, the closer the CAD is to the tipping point, the less gold will be available on the market and the slower CAD will sell. We see this today with the CAD at 5 pages of 0.033. When it was lower, there were only 3 pages or less of 0.03 or 0.032.
I'm actually getting somewhat frustrated as Alexander Rearden points out. I've given by now dozens of numerically significant points. I have yet to see one that illustrates how the loss of government purchasing power and real wages for everyone is overcome by a lower dollar.
I am sorry but I still fail to see why we can not have a weaker dollar. If your only anwser is that it lies below the natural equilibrium values of the economy then you are stating that money itself is an exogenous parameter in the economy. Meaning that it has 0 effect on overal economics.
I argue against this, simply cause a lower value will increase prices in terms of cad which will speed up the demand for cad. (in terms of gold you can still buy the same thing). With an artifically low value of the cad we are capable of exporting and at the same time remove incentives from importers. Keeping more of canadian wealth in canada. This model of economics is baed on a very old economic theory called merchantilism. And it looks like it is holding.
This theory says that the accumulated wealth of a nation is created by export. In this game it is the same except there are some extra ways of getting gold ( invites, awards etc). The government should thus stimulate export and not keeping a laisser-fair policy.
I argue that by lowering the value of the cad with an arbitrary amount (cad value bigger then 0.005), wages will adjust in the long run (weeks if not months). But in the short term economic boosts can be made by the increase in export. This increase in export will drive up prices ( as more is sold abroad, which in turn will allow for higher wages in both Cad and gold) On the long term these wage adjustments will counter the positive effects of a lower cad value.
But in the process the government will have earned a lot of extra gold by selling cad and companies will have gained extra gold with export. Which in return will effect employees in a good way.
I cant provide you with percentages or exact numbers. But history has shown that a value of a currency lower then its equilibrium will result in an economic boost( just look at real life china)
"I am sorry but I still fail to see why we can not have a weaker dollar."
You can, but you shouldn't. In the eUS, there's even a few people in Congress who are saying we should try to raise the peg on our own dollar.
A higher dollar means that everyone's wages will be worth more; sure, the actual number will likely go down, but your purchasing power will go up.
quite simply 2 weeks ago the dollar sat at 34, now it sits at 31.
many exporters are not advocating a devalued dollar, SIMPLY A RETURN TO WHAT IT WAS.
because we have too many companies here one cannot sell their resources here and expect the goods to actually sell.
but as the dollar rose i watched my sweedish profit slowly evaporate until there was none. so now my only market is croatia. however since the croatian minister of finance told every canadian it was a great place to sell diamonds now that market is saturated and its no longer very profitable.
My workers like yours are kept in constant communication with and understand the big picture and not just "hey i could go work for that other guy and make an extra cad or two" so i cant lower their wages ANY FURTHER. but i also cant hire anybody new because my export profits are GONE.
there is no way for me to grow my company and increase its quality if i cant sell my goods.
@Hertog Jan
You have fallen into the same trap that everyone has. You are ignoring the fact that Cad Printing along with everything else that needs to be paid in gold, will cost much more than it does now, up to 25%.
There is zero economic data and no one in this entire thread has even made one single attempt to show that a lower dollar's benefits (dubious as I've shown them to be) would be greater than the very significant losses it would incur to the government and to every single Canadian who makes their wages in CAD and every domestic businessman who makes their profits in CAD.
ones again Jacobi:'To get gold you have to sell your currency. Thus create demand for your currency. A high currency means lower prices means less demand for cad means that the monetairy offers sell slower.'
Just keep ignoring this simple fact...I wont have to explain to you that you will sell more cad @ 0.025 then you will @ 0.033, so the gold creations costs are not gonna be a significant problem.
Pick a rate and stick with it. It's the INSTABILITY of a currency that causes problems because it take salaries about three weeks to react to a change in currency value. The only other effect it has is on govt revenue from MM sales, which a inflation will adversely affect. Keep the CAD where it is.
Sweet, instead of saying anything at all about your own platform, you simply list what may happen if someone else is elected. Lucky for you, most people are too dim-witted to see through that sort of thing.