The Investment Currency Mechanism, the UK and the Financial Transaction Tax.

  • Thread starter Thread starter morganist
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Quote from morganist:

I have a portfolio of work really technical stuff. I just need promotion and blogging is good. I am good at it I think. No other blogger I now publishes their work at other organisations I get credibility for that.

I am just waiting for my usual bitchy Martinghoul 'Your Wrong'. With no explanation as to why. Then I have done my work for the week.
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under the present monetary paradigm, currency devaluation is what drives economy growth and competitive advantage in the context of global trade, e.g. china monetary policy is the last 10 years has lead to favorable imbalances in global trade. i doubt that the "artificially high purchasing power on an international stage" is beneficial for the UK economy at all. in fact, if we look closer at the huge twin deficits in UK (current and trade accounts) both have been fueled by the so called "artificial valuation of GBP" that made imports so cheap when compared with exports. this basically anihilated many industries in the UK, e.g. the car industry.

as for safe havens, i admit your conclusion is spot on, even though i believe their status has its roots in the the political stability, the rule of law and military prowess of the region/country, which will ultimately translates into a strong currency due to the constant inflows of funds to the region.
 
Quote from asap:

under the present monetary paradigm, currency devaluation is what drives economy growth and competitive advantage in the context of global trade, e.g. china monetary policy is the last 10 years has lead to favorable imbalances in global trade. i doubt that the "artificially high purchasing power on an international stage" is beneficial for the UK economy at all. in fact, if we look closer at the huge twin deficits in UK (current and trade accounts) both have been fueled by the so called "artificial valuation of GBP" that made imports so cheap when compared with exports. this basically anihilated many industries in the UK, e.g. the car industry.

as for safe havens, i admit your conclusion is spot on, even though i believe their status has its roots in the the political stability, the rule of law and military prowess of the region/country, which will ultimately translates into a strong currency due to the constant inflows of funds to the region.
More...

Thank you for your response. However I would argue that the financial sector in the UK is basically the main supporter of the UK apart from North Sea oil. There is no industry to sell abroad so a devalued pound would not help. It will take years to get the infrastructure needed to compete with foreign manufacturers, not to mention the cost of staff is not competative. Unfortunately the investment currency mechanism as a result of the finacial sector produced a higher standard of living than the UK deserved. If it goes or is affected the living standard will drop dramatically.
 
Quote from morganist:
I have a portfolio of work really technical stuff. I just need promotion and blogging is good. I am good at it I think. No other blogger I now publishes their work at other organisations I get credibility for that.

I am just waiting for my usual bitchy Martinghoul 'Your Wrong'. With no explanation as to why. Then I have done my work for the week.
More...
Don't be silly... Every time I tell you you're wrong, I go into excruciating detail and attempt to explain to you why what you say makes very little sense. Problem is that you don't listen, which means there's no point in me commenting.
 
Quote from Martinghoul:

Don't be silly... Every time I tell you you're wrong, I go into excruciating detail and attempt to explain to you why what you say makes very little sense. Problem is that you don't listen, which means there's no point in me commenting.
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No Martinghoul you do not. You just say you are wrong and then don't explain why. You also only see things from one perspective and assume it is absolute. Economics is the dismal science there is not simple answer.

Anyway I take it you didn't like the article.
 
martinghoul gives simple answers to complex questions?
Pot? Kettle? Black?
The epitome of simple answer to complex question is: some fool saying the US's reserve currency status depends on oil being priced in dollars. That alone disqualifies you as any sort of serious commenter on currencies.
I've said it before to you, and it's apparent you haven't done it, but for the lurker or two out there who might benefit, the one you want to read to get at least a basic grasp of the currency markets is Paul Einzig.
Here's a review of his History of Foreign Exchange, which says better than I ever could just how good he was.
First, learn the basics of the fx forward market and the money markets and how fx is hedged (lots of books and articles out there on that), then read Einzig's A Dynamic Theory of Forward Exchange, which as a bonus has an excellent section in the back on past currency crises going up to the time of the book's writing.
Then as a treat you can read his other stuff: Exchange Control for a night of serious reading, and for entertainment and some idea of how he saw the world, The Destiny of the Dollar.
The USD's reserve status, to get back to that, is determined by these figures (https://www.cia.gov/library/publications/the-world-factbook/geos/us.html):

US Imports and Exports: greater than 3 trillion dollars a year.
Value of Foreign Direct Investment in the US: 2.7 trillion
Value of US Foreign Direct Investment Overseas: 3.8 trillion

We are the 4th ranked exporter, the 1st ranked importer, and number one in both FDI here and our FDI overseas. Iran could decide tomorrow to price its oil in dinars, shekels, remnimbi, euros, or wampum, and it wouldn't make a bit of difference to the US dollar's reserve status. It's probably true as of right now that the USD is used only as a unit of account, and that if some eurozone country imports oil from there they probably pay up in the euro.
I'll leave the main premise of the article to martinghoul, if he cares to comment.
 
Quote from trefoil:

martinghoul gives simple answers to complex questions?
Pot? Kettle? Black?
The epitome of simple answer to complex question is: some fool saying the US's reserve currency status depends on oil being priced in dollars. That alone disqualifies you as any sort of serious commenter on currencies.
I've said it before to you, and it's apparent you haven't done it, but for the lurker or two out there who might benefit, the one you want to read to get at least a basic grasp of the currency markets is Paul Einzig.
Here's a review of his History of Foreign Exchange, which says better than I ever could just how good he was.
First, learn the basics of the fx forward market and the money markets and how fx is hedged (lots of books and articles out there on that), then read Einzig's A Dynamic Theory of Forward Exchange, which as a bonus has an excellent section in the back on past currency crises going up to the time of the book's writing.
Then as a treat you can read his other stuff: Exchange Control for a night of serious reading, and for entertainment and some idea of how he saw the world, The Destiny of the Dollar.
The USD's reserve status, to get back to that, is determined by these figures (https://www.cia.gov/library/publications/the-world-factbook/geos/us.html):

US Imports and Exports: greater than 3 trillion dollars a year.
Value of Foreign Direct Investment in the US: 2.7 trillion
Value of US Foreign Direct Investment Overseas: 3.8 trillion

We are the 4th ranked exporter, the 1st ranked importer, and number one in both FDI here and our FDI overseas. Iran could decide tomorrow to price its oil in dinars, shekels, remnimbi, euros, or wampum, and it wouldn't make a bit of difference to the US dollar's reserve status. It's probably true as of right now that the USD is used only as a unit of account, and that if some eurozone country imports oil from there they probably pay up in the euro.
I'll leave the main premise of the article to martinghoul, if he cares to comment.
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I never said the american dollar value depended on oil. I just said that the value of the dollar was artificially pushed up through the relationship. This makes the economy more stable and the more stable the more use it as an investment vehicle.

You have never told me to read einzig before.
 
Quote from Martinghoul:

Nah, I think I'll pass, for a whole variety of reasons...
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You take the piss but I get a lot of recognition for my work and when have you ever had anything published.
 
Quote from morganist:
You take the piss but I get a lot of recognition for my work and when have you ever had anything published.
More...
Well, therein, you see, lies the crux of our "irreconcilable differences". Why would you naturally assume that I, like you, am motivated by a need for recognition of the sort that you desire? I am not an academic and my livelihood doesn't depend on whether I publish (or perish) and get recognized. I am perfectly content to remain "unwept, unhonoured and unsung", so to speak.
 
Quote from Martinghoul:

Well, therein, you see, lies the crux of our "irreconcilable differences". Why would you naturally assume that I, like you, am motivated by a need for recognition of the sort that you desire? I am not an academic and my livelihood doesn't depend on whether I publish (or perish) and get recognized. I am perfectly content to remain "unwept, unhonoured and unsung", so to speak.
More...

It is not about the recognition that you mean. It is about credibility. If someone else publishes my work it becomes authoritive and gets readership. This is what is required to solve the situation.
 
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