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If there were a currency produced by an isolated island nation that is ONLY offered to citizens of that country and denied to anyone else in the world.
Suppose that currency can buy irreplaceable products from the island country, such as a gasoline that can allow a car to drive 1 million miles on one gas tank.
But the isolated country will only accept their own currency for purchases of any items from the island country
Govt will not any foreign persons to buy this currency but will offer no more than $2 to anyone who wants to trade the special currency for dollars.
But Govt won't allow anyone to buy the currency using dollars...only citizens can earn it through work hours that's it
You said trade the special currency for dollars. Now you say it has to be earned through work. Which is it?
The country in question can't survive without trade. Even if they have all the materials needed to be self sufficient, there will always be things that another country does better/faster/cheaper.
Never mind exchanging their currency. If they had gasoline that could power a car for a million miles, they'd be invaded in 5 seconds flat.
Nah, they would run to the USA and have them provide military support in exchange for trading the gasoline in USD. Barring that, yeah, they would be invaded.
What I said was the Island govt will not give ANYBODY 1 unit of island currency no matter how many US dollars you offered up. However, the island Govt will give you $2 US if you give the Govt 1 unit of the island currency, a transaction that no person has ever partaken in.
Basically the $2 for 1 unit of the island currency is not the market exchange rate. It's the Govt's fixed rate that is not marked to market.
It's like if I made the best cheesecake on the planet. If you are my friend you can have a slice, otherwise you will not get to even look at my cheesecake even if you offered me $200,000 I would say no deal. If you do have a slice of my cheesecake, on the other hand, I will give you a dollar if you give me your slice. What is the value of my cheesecake?
What I said was the Island govt will not give ANYBODY 1 unit of island currency no matter how many US dollars you offered up. However, the island Govt will give you $2 US if you give the Govt 1 unit of the island currency, a transaction that no person has ever partaken in.
Basically the $2 for 1 unit of the island currency is not the market exchange rate. It's the Govt's fixed rate that is not marked to market.
It's like if I made the best cheesecake on the planet. If you are my friend you can have a slice, otherwise you will not get to even look at my cheesecake even if you offered me $200,000 I would say no deal. If you do have a slice of my cheesecake, on the other hand, I will give you a dollar if you give me your slice. What is the value of my cheesecake?
The exchange rate doesn't change; it is still going to trade at $2USD:$1 Island currency. If I have USD I will offer $2 USD to the citizens for the island dollar. The fact that the island government wants to make life difficult for citizens won't change the fact that their currency is only worth $2.
The exchange rate doesn't change; it is still going to trade at $2USD:$1 Island currency. If I have USD I will offer $2 USD to the citizens for the island dollar. The fact that the island government wants to make life difficult for citizens won't change the fact that their currency is only worth $2.
Even if on the black market people are paying the island citizens more than $1.8 Million US dollars for 1 unit if island currency?
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