347 replies to this topic
Posted 19 May 2003 - 10:38 AM
WHY CURRENCY DEVALUATIONS ARE A LOSER'S GAME
If your country is productive and it's products are in demand, why reduce prices?
When prices are reduced (currency devalued) by 20%, you now need 21% more sales to benefit.
Imports are reduced because they are more expensive (20%), but imports must be reduced by more than 20% to benefit.
No country has ever devalued it's way to greater prosperity.
Posted 19 May 2003 - 12:25 PM
I retrieve the follwoing old commentary from my archive with the answer.Looks like people are serious about this numbers...... I saw it at Bloomberg, a commtary by Art Pine about 2 years ago; Bloomberg already removed that link. I will dig the exact number from my office's computer if it is still there.
this is prettry much an obsolete commentary so I skip most the part.
The Wealth Effect -- Not as Potent as Some Suggest
By Art Pine
Washington, Oct. 30 (Bloomberg) -- Next to the idea that there's a ``New Economy,'' the most ballyhooed concept in economics in recent years may be the ``wealth effect.''
Indeed, Edward N. Wolff, an economist at the Jerome Levy Institute, points out thatthe 1998 Fed figures show that 90 percent of total stock shares -- accounting for 79 percent of the overall value -- were held by the richest 10 percent of American families. The richest 1 percent held half of the total.
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