Monetary Policy

Day 669, 00:11 • Published in Peru USA • by NoneSuch

-I apologize for writing an English article in a Spanish country, but I wouldn't dare try using an online translator and my Southern Texas Spanish just isn't going to be enough for this article.

- The "Problem" -

-So what is the problem here? While I write this the #1 article in ePeru is about the government's monetary policy, so that's the problem. First of all, there is never going to be an absolutely perfectly valued currency. If there was a perfect value, everybody in the world would already know what it was and you wouldn't be reading this right now.

-The best anyone can do is speculate and compare their country's currency to other countries'. You need to compile a list of your country's main exporters and importers, find out the value of their currencies, and find a value that works. But how do you find a value that works?

- A Possible Solution -

-After you've made your list of those exporters and importers and found out their currency values it's not very hard. You will want your currency to be worth more than the country that is importing goods and you will want your currency to be worth less than the people you are exporting to. Why?

Importing countries: Let's say that a company in eChina can import to either ePeru or eChile. The citizens in ePeru and eChile have the same wages in terms of currency (which would usually mean that their goods will be the same in terms of currency), but ePeru's currency is worth more than eChile's. The company in eChina is going to sell its goods on the ePeruvian country because even though it gets the same amount of PEN, if it were to sell that PEN it would receive more Gold.

Exporting countries: Now let's say that a company in ePeru can export to either eUSA of eUK. The eUS's and eUK's citizens make the same in terms of currency (so the goods should be the same in terms of currency) but eUK's currency is worth more in terms of Gold. Which country will the ePeruvian country sell to? It will sell to the eUK because even though they get the same amount of currency, the ePeruvian company will earn more in terms of Gold.

-Your goal should be to set your currency value somewhere inbetween. If you want to increase exports, lower the value of currency. If you want to increase imports, increase the value of currency. I will admit that the government needs to actually have a plan, not just pick a nice looking number and force us all to work with it.

- What This Will Do -

-If ePeru were to follow this plan, there would be more offers on the ePeruvian market, which would make products cheaper due to competition, which means that everyone spends a little less when buying on the ePeruvian market, which then means that ePeru's standard of living just got a little higher.

-This plan would increase ePeru's overall wealth. Now that ePeruvian companies are exporting more, they are bringing in foreign wealth. For every ePeruvian product bought in a foreign market, that's some other country's currency/Gold coming into ePeru. ePeru would be closing the gap between itself and richer countries.

- What I Would Do -

-I wouldn't actually do anything if it were up to me... I'm a believer of the free market and letting the Monetary Market work itself out. I'm just expressing an opinion.

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