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I would agree that the world is currently in big trouble, and that the recent volatility in foreign exchange, commodity and equity markets is nothing compared to what's ahead.
All the more tragic that so many are unable to see through the vapid media fanfaring of economic recovery. The prudent will prepare for hard times ahead, but too many in the west don't have any savings whatsoever to fall back on when events turn bad.
I would agree that the world is currently in big trouble, and that the recent volatility in foreign exchange, commodity and equity markets is nothing compared to what's ahead.
All the more tragic that so many are unable to see through the vapid media fanfaring of economic recovery. The prudent will prepare for hard times ahead, but too many in the west don't have any savings whatsoever to fall back on when events turn bad.
Imagine if US raise the interest rate, other countries will suffer more, their currencies will devaluate more.
But whether US do it or not, US will never lose this currency war. In 2015, US' GDP will increse its share of the world's GDP.
Imagine if US raise the interest rate, other countries will suffer more, their currencies will devaluate more.
But whether US do it or not, US will never lose this currency war. In 2015, US' GDP will increse its share of the world's GDP.
I don't think we can make any certain claims.
I think we're pretty much in new territory as far as global exposure to systemic contingencies is concerned.
First of all, the GDP is only a guide, not an absolute indicator of anything. They are approximations based on two fluid figures being divided by each other on a certain day. Besides the fact that "per capita" is not a good yardstick of the economy among nations. More accurate would be "per productive worker" or "per household unit", because spending discretionary earnings is distributed in that way. And in various counties, per capita can be in a very different ratio to per worker or per household. The figures cannot be used to judge, for example, whether people there can afford a Toyota, because percap/GDP say nothing about how many people can afford a Toyota, according to the nations income distribution. Two nations with the same GDP may have very different numbers of people who can afford items, even if they are the same price in terms of the prevailing rate of exchange.
You also have what I call "spurious exactitude" taking place, the figures are not rounded, but carried out to the nearest dollar, giving an impression of precision that is not born out in reality. It is like the news reports of an earthquake, in which a reporter is told that it occurred "1,000 kilometers north of Bugabuga", and reports to the American readers that it was 625 miles from Bugabuga, even though 1,000 kilometers was an approximation plus or minus 20%. But the news reader is given the impression that the distance has a 1% margin of error, being rounded off to the nearest five miles.
So in the five countries you itemized, consumers have essentially the same per capita buying power, regardless of fluctuation in the exchange rate. Splitting hairs over differences of a few units yields no new light, they remain approximately equal.
I might also add that inflation of currency value in a country does not necessarily go hand in hand with erosion of economic growth. Much of Brazil's rapid move up the ladder occurred in the 80s and 90s when there was precipitous inflation taking place within the national economy, and two different currency revaluations..
This why sometimes a PPP comparison is more useful. I'll add that a currency value too high has downside; mainly that a country's exports get more expensive. Switzerland's central bank went to great effort to prevent the currency value from rising. Eventually it was too much and the value of the franc surged by 15%. Swiss stock prices fell, not rose.
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