So
if Labour wins in 2014, David Parker, Labour Finance Spokesman, will be looking to ‘target a lower exchange rate’. I simply offer to Mr Parker the same
contract I have offered to Bernard Hickey in the past, (never taken up by him):
‘You seem to believe that a weak currency is an
economic advantage, so I offer you the following contract. I shall exchange all
the money in your house at the rate of 50 cents for each $1. Further, I will
exchange all the income coming into your house, giving you 50 cents for each
$1. You now have a weak currency and so will become an economic powerhouse
(according to your theory), whereas poor old me am going to be hamstrung with a
strong currency. I am, however, quite willing to offer you this
contract/service. Do we have a deal? If so, we'll swap bank account numbers,
you put all your money in my bank and I'll simply put half of that back in
return. If no contact, why not?’
It
doesn’t work economically, and philosophically it’s worse: it’s the bigger Big
State. It’s your life controlled.
Hattip to Cafe Hayek.
Hattip to Cafe Hayek.
Another consequence of devaluation not understood by the advocates of devaluation, who would I believe be opposed to the purchase of New Zealand assets by overseas investors, is that devaluation reduces the value of New Zealand, making New Zealand assets even more attractive.
ReplyDeleteYes. But therein lies my real problem, as you can see the course of events: they meddle to lower the exchange rates, then, unintended consequence, New Zealand assets become easier to buy, and then because they don't understand that is not a problem , they pass xenophobic, nationalistic nonsense laws to stop that, and so on until the State/s are so big they've, first, destroyed liberty within them and created a huge number dependent on the State's plundering of the productive group so the rest can live, second, via that they've destroyed economies, as is happening now, which leads to, thirdly, World War III. And am I joking on that: Russia is currently kicking against a philosophically weakened, socialist US, China and Japan are really 'at it', over a set of unpopulated islands, to the extent many Japanese businesses in China have had to close under threats of physical violence, and China looks to be gearing up for a bond attack against Japan (whose national debt is 220% of GDP - a place no Western country has ever been, and soon 70% of their national budget will just be debt servicing); Israel is getting set to strike Iran's nuclear facilities which combined with an Islamic world which is mental and violent, could involve the middle east in a general conflagration.
DeleteMakes you think over your coffee. If Parker devalues our currency, he may well start World War III ;) Truly.