Where does the eUS Stand? (Concerning Atlantis Economies)
Jewitt
The following is a written-in article by Jewitt, UCP Congressman of Tennessee. It is a synopsis of both in-game mechanics and personal opinion based on the bias of Jewitt. These views do not reflect that of The Report nor of the eUS Government or any other body.
Editor's Notes
Before reading, make sure to take note of these terms:
"conversion rate" is the 1 USD to GOLD ratio, found at the Money Market.
"local" or "local rate" is where 1 GOLD will purchase this amount of local currency
"trade deficit" is where a country imports more than exports, thus losing money to a foreign country
"RM" abbreviation for Raw Material (Land)
"FG" abbreviation for Finished Goods (Manufacturing and Construction)
"Tariffs" interchangeable with the term "Import Tax"
"Producing Powers" any nation which holds the ability to mass produce 2+ RMs internationally
"Double taxation on foreign sales," references how foreign companies must pay VAT and Tariffs
Our USD
Right now, our USD has a conversion rate of 0.015. At current, I see this as a healthy and progressive rate. Many claim we should raise it; why?
A few have suggested rates of 0.018, 0.02, or even 0.025. Arguments strain from, "We have a weaker currency than most Atlantis nations!" or, "We can buy more with it internationally." This is all true.
Compare to Atlantis Currencies
When it comes to Atlantis, we fall a little short - but barely. Here's some fun facts:
Currency - Ratio [Local] (Nation)
CAD - 0.025 [41.60] (Canada)
HRK - 0.019 [55.80] (Croatia)
RON - 0.018 [58.70] (Romania)
ESP - 0.033 [31.70] (Spain) - - - - Highest Valued
SEK - 0.022 [53.20] (Sweden)
USD - 0.015 [70.90] (USA) - - - - Lowest Valued
GBP - 0.026 [38.80] (UK)
Obviously, we are the lowest of the low when it comes to currency values. Curiously, let's look at how much these nations export / import compared to the eUSA.
(Nation - Export / Import) All in GOLD, monthly
CAD - 162.38 / 5.45 (+156.93)
HRK - 29.91 / NA
RON - 464.17 / 855.92 (-391.75)
ESP - 477.07 / 146.92 (+330.15)
SEK - 145.61 / NA
USD - 303.07 / 55.31 (+247.76)
GBP - 105.49 / 133.24 (-27.75)
So, let's note the countries that are pulling a trade deficit (in order of most lost):
Romania (Losing almost 392 GOLD a month!)
UK (Losing a small 28 GOLD monthly)
How about trade surplus (most benefits sooner)?:
Spain (Making over 330 GOLD a month is a great feat!)
USA (At almost 250 GOLD, we're bringing in lots of foreign money)
Canada (With a snack-sized 156 GOLD, Canada is not too bad off)
Note that Sweden and Croatia are exempt, as their import information is unavailable. Due to Sweden's dependence on wood, I would assume their figures are close to UK, while Croatia may be a polar opposite of Canada, as it needs to import all RMs.
Let's Use these Numbers
Now, let's look at each case one-by-one.
Romania. I expect their trade deficit to rise slightly, but not by more than 50 GOLD. Their entire economy revolves around consumerism and has a lagging RM industry compared to other Atlantis nations. Do not get me wrong, when it comes to economic stability Romania is top ranked.
United Kingdom. Their economy is best described as "Service Economy," which is where they take in RM and produce fine FG that are then exported. However, they also have a huge consumer base and because of this keep a lot of their FG in-country. This is a clear lining to their trade deficit.
Croatia. Another "Service Economy" where they have no viable RM capabilities aside from Grain, and even then its poor at best. I expect their imports to be equal to or slightly above their export next month when eRepublik.com gives a reformulation. If they keep their currency strong, they may turn out like a Romania-styled economy.
Sweden. This country is extremely dependent on the international trade for all RM just like Croatia. Nothing much to say, though it obviously does a very good job in producing cheap FG and then projecting them on the foreign markets. This no doubt has to do with their lacking of import taxes on all RM and their semi-protectionist FG tariffs.
Canada. This is an odd economy in itself. When giving a little explanation about world economies, I called the Canadian one "Mini eUSA." It is far from it, but they do pull off a trade surplus. Not much to say, their economy is quite jumbled but they produce RM very well and export it extensively.
Spain. This is a hard cookie to crack, but it is one of the "Producing Powers" I once talked about. They have high grain and iron, but nothing else. They lack in oil (a minor industrial need) but import heavily diamonds and, especially to us eAmericans, wood. Their current protectionist legislation has many in arms, myself no lesser, but it is showing. Their domestic wood prices have skyrocketed and all of the previous offers below 10 ESP (wood was competitively selling for 1.2 ESP just a few days ago) have been bought up; a clear indicator of a lack of supply. By cutting off their wood supply, they have hampered three industries from progression but have yet touch oil or diamond. On a lighter note, Spain is one of the world's largest iron exporters, which is my reasoning behind their massive trade surplus.
USA. Good ol' Glory, one of few "Producing Powers" and a stable for a strong economy indeed. I believe we have the healthiest ratio from import to export with no imbalances. We export grain, wood, and oil like we're sending water to the Sahara and import just enough iron and diamond to get by. We also export a large portion of FG to neutral and "lesser" Atlantis countries. With our USD conversion rate of 0.015, it also allows us to sell much lower on foreign Atlantis markets for a better profit, which is a clear benefit of a lower currency. It also makes it harder for foreign competition to come here and sell their products without losing due to conversion rate and double taxation on foreign sales.
What Have we Learned?
It is for you to decide and discuss. To me, this proves that the USD being low (though not third-world low) in conversion ratios is to our benefit as a nation. I will formally say that 0.015 is a healthy, productive, and strong enough conversion rate for any near future endeavors and allows our nation to export extensively and thoroughly purchase fairly priced iron and diamonds.
________________________________________ _________________________________
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Comments
voted already a reader. very detailed Jewitt, nice.
How much did the lack of war throw off these numbers over the last month? (Portugal doesn't really count).
Great article!
When comparing currency strength between nations, it is best to make that judgment on a currency's purchasing power rather than on its convertibility to Gold.
Purchasing Power Parity (aka: PPP) determines the relative strength of a currency. How many widgets can you obtain with 1 Dollar of this currency vs. that currency in their local markets.
nice, a fair look over the dominant echonomies of the eWorld. Maybe, the politicians sould also take a look, jost to be inspired. 😛
Trex21: I am one of those "politicians" and I do these economic reports to sort of get that aspect covered (military and "promises" plague the media too much).
Alby,
I agree, but in eRep PPP is extremely difficult to figure and takes much more time than I have to contribute to the game. Possibly you could do this yourself? I realize the opposite conversion (1 GOLD -> Currency) is typically better purchasing power indicator, but for the sake of global simplicity, I stick to 1 Currency -> GOLD.
and by the way, a low walue of the USD is a great advantage, compared to the others. They think they can buy more products, the americans DO sell more, and everybody is happy. 🙂 if the prices are fair, the purchasing power will not be brought down by a falling value on the monetary market. 😉
@jewitt, I'm new in american politics, and I only got a glimpse of the main events here. 😛 ( like the loss of the treasury. ) so, Please be patient with me, I'll catch up soon 😉
As always, an excellent report Jewitt. I'm glad that you are willing to put these out. They're always educational.
Alby DOES do ppp, and its very nice to have...
Jewitt: I've drafted some PPP charts, although they are dated now. Maybe I'll put some time in today on a new PPP chart. You are right, it is time consuming. You need to know each country's exchange range along with the price of goods in each nation. I've limited my PPP charting to Q1 Food since it is the most universal product sold in all markets.
Jewitt: For your conversion chart you should use 1 gold = X local currency. Not only does it change more rapidly than 1 usd = X gold, but its the conversion I find most people tend to use more.
voted
Marquis:
Agree.. Until we start getting currencies that are worth more than Gold, its best to keep it in the format of 1 USD = XX/Gold
Before I start my rant, excellent again Jewitt. I'll have to go back and reread this more slowly to absorb it, but the first pass is quite informative and helpful.
Follow on to Marquis:
I never use the currency = gold simply because it is too coarse a measure. To use the monetary market for USD as our example, 1 gold = ~70 USD today. The ask side of this market is priced in 100ths of 1 USD so many different finely differentiated transactions are presented. It is orderly and fluid.
The bid side of the market is expressed in 1000ths of Gold. Unfortunately this means that the smallest difference in transactions is 7% (.001/.014 or .001/.015), which is far greater than the bi😛ask spread for most eworld currencies.
While I won't go so far as to tell Jewitt what he should do, I do find the 1 USD = x Gold to be a useless metric.
I do find the 1 USD = x Gold to be a useless metric.
Yep, plus it changes verrrry slowly. If you used the 1 gold = X USD ratio you could see for example that in the past few days the value of USD has increased from 1 gold = approx 73 USD to 1 gold = approx 70 USD.
Hurling:
If anybody is looking to buy Dollars, and is usually Business, Governments, Citizens, etc, its more likely the Currency=Gold metric has much more meaning to more people (ie: The Demand Side of the Dollar) than does the Sell Side (Gold = Currency) of the dollar to buy Gold.
Gold is pretty much the defacto reserve currency of eRepublik. So when it comes to talking about the economics of nations, trade balance, etc, its more likely discussed in terms of the local currency. As such, the cost of obtaining that currency is more important than the cost of selling that currency to obtain the world's reserve currency (Gold).
For example, Ole Alby needs an airline ticket. It costs $15/USD.
If I need to obtain $15/USD, I'm more interested in the USD = Gold metric of 1/USD = 0.015/Gold.
AWESOME article...well done!
love it, well done, voted
I'm pretty sure Romania has had Podolia for ages, so I think your country breakdown is pretty far off in that one.
Well guys, due to me now having readers which are more economy-savvy and yearning for more thorough work, I may switch over to the GOLD -> Currency rates for my newer articles. It'll take me of my time, but I try not to put out "crap media."
Forgive me, readers, as my other obligations on this damned site have my attention elsewhere.
As to the comment of Podolia,
I made a mistake and thought it was part of the Russian invasion (Along with Western Siberia). I have amended the article slightly to agree with this. I apologize.
Very well done.
Notice: I have also changed my graph! It now displays both the Currency to Gold Ratio and the Gold to Currency. New terms are described in "Editor's Notes."
Enjoy.
Norway is in ATLANTIS.
As well as Finland...
"I will formally say that 0.015 is a healthy, productive, and strong enough conversion rate"
Agree. Excellent article Jewitt. Loads of details, well researched.
Jewitt great article- lots of good information...
and then I read the comments..So good effort. ROFL. Yeah if you stick your neck out and start spouting any economic figures in this game the econ vultures will encircle! (not that I'm in a position to say they are wrong or right)
Good like on fine tuning that conversion! 🙂
Norway and Finland are, in fact, in Atlantis. However, in the eUSA they get little coverage in-media and I am writing this for the eUSAian. If you guys want to complain then take it elsewhere. I did this as a comparative study, not as a thorough report.
For those that enjoyed it, I am glad I brought this to your attention!
Voted and subscribed.
Great article, very detailed and not too hard to read 😉 voted and subscribed.
I love this manjew
😃
wonderful article (as always)
where is Poland ?
Europe 😃 (It is not a major economic player...as described in the article, only the top economies were chosen for clean and straight-forward presentation).