The Mudcat Café TM
Thread #127472 Message #3000645
Posted By: Sawzaw
05-Oct-10 - 10:47 PM
Thread Name: BS: The Tea Party a Terrorist Organization??
Subject: RE: BS: The Tea Party a Terrorist Organization??
You could benefit from some facts. Got any? I even tried to agree with you when I could but forget that, your knee-jerk reaction is to turn it into a argument every time.
YES BOBERT IT WOULD TAKE A BITE OUT OF OUR TRADE DEFICIT. I AGREE with you on that.
Is that all it would do? All I see is a link to somewhere. Did you read it? Is there any downside? Yabetcha: Effects of Devaluation [from Bobert's 1999 link] A significant danger is that by increasing the price of imports and stimulating greater demand for domestic products, devaluation can aggravate inflation. If this happens, the government may have to raise interest rates to control inflation, but at the cost of slower economic growth.
Another risk of devaluation is psychological. To the extent that devaluation is viewed as a sign of economic weakness, the creditworthiness of the nation may be jeopardized. Thus, devaluation may dampen investor confidence in the country's economy and hurt the country's ability to secure foreign investment.
Another possible consequence is a round of successive devaluations. For instance, trading partners may become concerned that a devaluation might negatively affect their own export industries. Neighboring countries might devalue their own currencies to offset the effects of their trading partner's devaluation. Such "beggar thy neighbor" policies tend to exacerbate economic difficulties by creating instability in broader financial markets.
Since the 1930s, various international organizations such as the International Monetary Fund (IMF) have been established to help nations coordinate their trade and foreign exchange policies and thereby avoid successive rounds of devaluation and retaliation. The 1976 revision of Article IV of the IMF charter encourages policymakers to avoid "manipulating exchange rates...to gain an unfair competitive advantage over other members." With this revision, the IMF also set forth each member nation's right to freely choose an exchange rate system.
Hmmmmmmmmmmmmmmm. Since the great depression the IMF has been advising against devaluation. Wonder why?