Do You Want a Strong USD or a Weak One?
Jewitt
Facing our nation yet again is the same question: Do we want a strong currency or a weak currency? The economists scream weak, while the nationalists and real-life theorists demand a stronger worth. I have broken this article into three sections: Worker/Consumer, General Manager, and National Economic State. If one wishes, they could just review the section which pertains to them. I have thrown in a final section which I hope all, regardless of status in eUSA in relevance to this, would read.
Strong v. Weak and the Workers and Consumers
I have seen articles asking for a stronger currency, anywhere from 1 USD -> GOLD = 0.02 to even 0.033 (to be competitive with “Economically Strong” Spain; which, spoiler: Spain is quite instable when it comes to its economic markets). A weak currency is typically anywhere from a Currency to GOLD ratio of 0.01 to 0.013. In the eUSA, we have a steady figure of around 0.015 and 0.016 and have for some time. One could call us a “moderate” strength currency.
As a worker, what does a strong currency offer over a weaker one? You still get paid 18 USD at skill 4 for a Land job if the USD is worth 0.016 or 0.033. Your pay may not change, so why does it matter?
As a consumer, you still buy food for 1.82 USD from our own domestic companies which use domestic grain. It does not matter if the USD is worth 0.033 or 0.009; as long as stables (grain, food) are purchased through in-country domestic conditions prices will not change even if the currency does.
So, what is the harm of a strong currency? With a stronger currency, we will attract more foreign competition, and it would make our companies struggle to export since our currency would be worth so much compared to relative countries we ship to. Would this harm the eUSA consumer? Absolutely not, as foreign companies will begin to infiltrate and undercut our domestic companies; consumers will win with lower prices!
Then again, how would our consumers get money when the jobs they worked for cannot compete? For references: See Swede or Turkish grain/food markets. The former Chinese iron industry would be another example (for those which know of it, or if there are any records remaining).
Strong v. Weak and the General Manager
Our nation’s wealth and economic stability does not come from our consumerism or our national pride of hard work, as is the fact with real-life USA. Our economic strength comes from the General Managers which export to other countries.
Exporting companies, mostly in Grain, Wood, Food, Tickets, Housing, and Oil industries, are well managed and are very much efficiently ran. Our USD rate of 0.016 has allowed for our companies to export to fellow Atlantis nations and neutral nations very effectively. What does this mean for the economy? We are bringing foreign wealth, GOLD, and currency into our economy; thus allowing our economy to grow and their economy to be harmed – a side affect which cannot be avoided in the eRepublik economic system.
These companies not only have allowed our economy to grow but have also allowed for General Managers of less efficiency to operate domestically; allowing for basic price competition and for the entrepreneurial dream to be seen by even the most GOLD-stricken citizen wishing for a career as capitalist whiz kid. By promoting exports with a lower currency exchange rate, we have allowed rich and poor to operate and gain profits; all the while employing thousands of eUS citizens.
However, as the currency becomes worth more, it can buy more. As the 3rd largest trade surplus generator in the eWorld, and the first trade surplus generator in Atlantis, the eUSA is doing something right by keeping their currency much lower than other nations. This, as a side effect, has given us one problem: Iron and diamonds is the only product we do not have domestically and we must import.
With a weak currency, imports cost a lot more and, likewise, their finished goods (Weapons and Gifts) are also more expensive. Fortunate for the eUS, weapons prices are some of the cheapest in the eWorld and Gifts are often bought here by foreign organizations for re-selling in their own country. Then again, the eUSA does not have a weak currency, but a “moderate” one.
Strong v. Weak and the Economy
Quite frankly, the eUSA is one of the most gifted countries in the eWorld as we hold three high Raw Materials in 2+ regions each! This means our economic security is pretty well off to begin with – especially compared to nations whose wealth comes from one region and must defend it at all costs.
The eUS, equal to only one other country (Hint: In their local language, it is spelled “Brasil”), has a sort of economic security other nations do not have: They have resources and are able to export them to 4 or more nations in at least two continents of the eWorld. This adds to increased economic security, stability, and allows our General Managers the ability to expand as the markets seem to close one door, but open two more. Ultimately, our status as an exporting nation allows for both the worker and General Manager to prosper.
Not only this, but our trading has allowed us to bring in over 300 GOLD last month, compared to the previous 253 GOLD of the previous, in a trade surplus. This means that over 300 GOLD was taken from other nations via trade and was reentered into our economy; reinforcing it with wealth in the GOLD standard and increasing the perceived wealth of the eNation. Let’s compare this to our “economic competitor” Spain, which only brought in a mere 181 GOLD.*
So it seems to me and anyone with at least a High School Economics class education that our currency, at 0.016/0.015, or even 0.014, seem to be working to our benefit of projecting our goods internationally and thus growing the economy without causing a massive cost for weapons and gift companies.
Which is “Best” for the eNation?
That is for you, the voter, to decide. Many candidates have pledged that we need a stronger currency and to shut out the foreign competition. If you read the “Strong v. Weak and the Worker and Consumers” then you would know this is a terrible analogy.
On the table is the question: Do we want to be an importing country, and fairly competing with foreign companies (side affect of high currencies), or do we want to be an exporting country causing competition in foreign markets (side affect of low currencies)? Do we want to send our wealth overseas to other countries, or do we want to keep our wealth here while taking some from other nations? Do we want to employ only what is needed to be able to compete in our domestic markets, or do we want to be able to employ the masses as international demand rises with the eWorld’s population growth?
eNation, that is for you to decide.
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To Do List:
Ask your congressman if they really are voting and voicing their opinions, or if they are just sitting there, enjoying that 5 GOLD and +20 EXP.
If you are interested in my lesser-detailed platform check out this link. If you agree, I would like it if my party gained in numbers to make a statement that we want change, and not the same old policies of yesteryear.
Hatemail is greatly accepted, as our Albanian Public Relations Office is now up and running. There are still employment opportunities, such as bicycle runner and print alignment.
-Jewitt, Chief Editor
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*Information may be inaccurate, as eRepublik.com figures are missing and is a general estimation based on legislation, territories, operating companies with export licenses, and imported goods. Error should be assumed as (+75)/(-30) GOLD roughly.
Comments
I don't know how to spel lthe first thing!!!
Pertamax**
This would seem to me to argue that our economy is not in such struggling straits as some suggest.
Strong Dollar, Hands Down can't be beat. Yes exports suffer, but our GDP grows stronger along with domestic suppliers.
SamWystan: This is true. Our economy is actually very stable and healthy; especially compared to our Atlantis brethren.
Alby: Of course our GDP rises, because all transactions are in USD and the worth of it rises, so does the GDP since the GDP is displayed in GOLD figure. However, with a higher currency, we lose our exports and start to send our dollars overseas and into the coffers of foreign companies to fuel their economy. Call me economically nativist, but I cannot accept our economic policy if it allows us to pull trade deficits.
Moderate appears to be working just fine.
Jewitt.. If there are worries of a trade deficit, hike imports, with exceptions on raw materials we need.
I don't see why we should be trying to manipulate the value of the USD. Just let the market deal with itself.
I want a strong USD!
So you do agree that exporting is better than importing?
Exporting is always better than importing unless we have a low supply at home. It makes no sense to lower our export revenue in the sake of "adding worth" to the USD if our nation has such a strong and stable economy to begin with, plus a massive trade surplus. We are well supplied at home, so why not export and bring foreign GOLD into our own nation?
As always another great article. It is so packed with knowledge that I can never finish them unfortunately...🙁
Again, an excellent article! I'm for the low end of stable currency --- right where we are now is great. Not to strong, not to weak --- just right.
Another indicator of the wellness of the eUSA economy, in the MM we have one of the lower spreads ---- low spread between bid and ask usually = efficient economy
A Strong Dollar keeps prices down and has a higher purchasing power – benefits not to be overlooked. Another benefit of a strong dollar is that other countries are encouraged to use the dollar as their reserve currency. Although we would need a currency valued at more than 1/Gold to make that a reality.
Think about it. Nations jumping over themselves to get their hands on dollars. This would give the US an edge in wartime. In that we can sell dollars for values in excess of Gold to better fund a military conquest than our enemies. Imagine if $1.00/USD = 1.5/Gold. The government would be drooling with wealth and its ability to load up on Q5 weapons and dish out Gold to fund tanks.
Once the people elect me as President, such a dream will move closer to reality.
I may be rather new at this but, is it even possible to keep a stable exchange rate that high(1USD = 1.5GOLD) I would believe it would require great support from all the industries in eUSA.
I have to believe that the crux of this fundamental misunderstanding is derives from the usage of the emotionally laden strong and weak. I the djinn of the lamp appeared and offered you one wish, "Do you want to be weak or to be strong?" no one would wish for weakness.
The words simply do not have that meaning in this monetary context. At our current valuation we are exporting inexhaustible, limitless commodities (RM and the labor that went into them) and are importing a relatively finite quantity - gold. We send out something we cannot run out of in exchange for something everyone on the planet competes for.
Stop and think if we would really be better off doing the reverse.
Alby, step away from the pipe.....🙂 that sounds good in theory but would make exports impossible and allow imports to flourish even with very high import tax rates --- they would make more profits in their home currencies. In addition would actually decrease the buying power of eUSA consumers.
Great article Jewitt. Now stop undercutting me in our export markets.
Undercutting? Where? I do not mess with your market anymore 😛 Thanks, and yes, Alby, your theory sounds great...in theory. So does Communism. It will not work unless we do it through economic manipulation and even then, it would be terrible for overall domestic businesses.
With a surplus like that, why should we worry about the value of the USD? What are the long term implications of keeping the value of the USD at where it is?
Epic Thoughts: The surplus which occurs relies on our keeping the dollar low. When our dollar rises, we export less (and bring in less foreign GOLD) and import more (send our GOLD over there).
Many in the Economic Council and abroad tend to like the 0.015 USD figure as we had well priced iron/diamonds (our only imports) and brought in more foreign GOLD than any other Atlantis nation, and was ranked 3rd in international exports (beaten by Indonesia and Brazil...Indonesia due to selling their supplies for war and Brazil because, like eUS, is naturally set up as a high productivity region powerhouse).
Can someone spare a wellness pack or 2? I would be very grateful
I want a predictable range in the exchange rate so I can buy low, sell high & repeat with low risk.
Some people want the USD down.
When the USD is down they BUY cheaper, and we SELL cheaper.
That's why I love this article, which helps us get the USD stronger.
A high valued dollar help me as a worker since I convert my pay into gold.$20 at .033 gets me more gold. Something you seemed to miss. I needs gol so I can go crazy when a serious war comes.
Shalmorn: This is true, but when it comes to overall business less people are employed. Consumers do gain more purchasing power and I have edited my article accordingly (I did leave that out, I'll admit). Then again, if everyone can get onto GOLD easier that means more businesses and less workers so :/ It's a double-edged sword.
Um....
Why don't you just use the MIDDLE?
Have a decent strength currency (the USD has, over the last three months, been worth crap anyway) WHILE exporting. Only super strong currencies are hard to export from. Medium strength (see: Rest of world) aren't that hard. If you're using your own export market to analyse, remember your country is twice the size of any other, therefore you need to reduce your numbers to grab an overall value for anything. Just because you have 11K people in population doesnt mean your export markets are all that good. It just means you have 11K people.
Idiotic. Wealth comes simply from producing and having more because of it. Dollar value is just a number. Any benefits or drawbacks you think you see are just unbalanced equations. Exports = Imports without imports there are no exports without exports there are no imports.
You are wrong. If the worker is looking for long term goal for example starting a company of course he wants a strong usd to be able to invest in gold efficient and then a company.