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.
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
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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-Jewitt, Chief Editor