About economic processes in Thailand - UPDATE

Day 483, 04:29 Published in Thailand Hungary by Jean-Paul Sartre

(UPDATE: This article takes strong THB as fact. This has proven to be an illusion since, see at the end of the article.)

We are seeing the government's propaganda here and there that how artificial strengthening of THB have strengthened our economy, prices decreased, and "exporters" showing up selling goods in our domestic market.

I am sad to disappoint those who was believing these statements, but there are several factual and conceptional errors in the above propaganda.

Buying up THB means that the amount of gold in the bank will be less. Yes, if you sum up the bank accounts in gold using actual change rates, you have even increased the nominal amount of money of the bank. But without real economic growth you cannot realize this "profit", as putting the money on the market would make as much inflation as it has wrapped up. The only way the bank could realize the profit by buying goods on the domestic market fast (or do things which equal to this in effect), thus creating not just inflation, but also shortage of goods. In this way every thai citizen would pay the profit who have some baht in their pocket or buys in the domestic market. Thus high currency value is not a positive thing in itself.

To understand the price mechanisms, one have to be aware of some global economic facts:
- There is an increased productivity worldwide (minus Thailand) created by world war.
- There is a sharp decrease in consuming due to the coffe break in the war and electionless time (party elections do not make many people to move).
- Because of the above facts prices have significantly dropped everywhere in the world.
Above I was talking about prices in gold. Due to stonger THB, prices did not decrease here in the same pace as in other parts of the world. This is why "exporters" (note the notional ambiguisness here. they actually import to Thailand) have shown up, and BRINGING OUT GOLD FROM THE COUNTRY.

In short term importing companies will actually make THB a bit stronger, as they heaping up THB in their acounts. But as soon as they realize they profit, changing THB to gold, inflation will occur.

This means that domestic companies (and employees in the long term) are in trouble. I am seeing prices on the market which are barely profitable given our high vages, which have just increased with stronger THB.

Yes, the above means that employees in the short term have more money: higher vages, lower prices. But they are the ones who will throw out gold beyond the borders of the country, and make companies unprofitable, thus making economy collapse in the long run.


The THB-to gold exchange rates since erep day 475 are below. Note that until day 480 I measured it on the thb-for-gold side, and since day 481 I measure it on the gold-for-thb side. The current thb-for-gold rate is 0.011, and the amount on that side is nearly 200 gold.
475 0.011
476 0.011
477 0.011
478 0.011
479 0.01
480 0.012
481 0.00952380952381
482 0.00952380952381
483 0.009708737864078