The world is awash with money/debt that is being created at an exponential rate by many central banks around the world. However the growth rate of 2% much favored by most governors stubbornly refuses to rise to that level. So why is it, when the basics of supply/demand/liquidity are all available to the world of humanity is there such paralysis?
The markets are full of goods for sale, there are millions who would buy if they had the money, and there is between 200 and 250 Trillion (depending who you ask) US dollars of money/debt in existence worldwide. So if there is no growth now, how is printing more going to make a positive difference?
The other question of course is why if there is supply/demand /liquidity by the bucket load, is the world’s economic growth going in reverse?
Chris

QE only helps a little bit. It's much better to get fiscal policy to do the heavy lifting, but governments around the world are too obsessed with their balanced budget mantra to attempt that.

The world's economic growth is NOT going in reverse, but it's a lot lower than it would be if competent economic management were the norm.

Too Aiden
So you think governments should get further in to debt to increase the expansion of the economy? Please name one country that has a balanced budget.
Could you explain further how you think liquidity expansion helps, even a little bit?
Could you also explain why you think the Trillions that all ready exist are not circulating as they used too.
Chris

G'day LEFTY ONE,
Someone has to get further into debt to increase the expansion of the economy, and it makes sense for it to be governments: firstly because they have objectives other than just making a profit, but they'll never retire so don't ever need to reach the stage of having no debt, and secondly because they have the deepest pockets (unlimited in the case of countries like Australia which issue their own currency).

Germany's very close to having a balanced budget, though it does vary a bit from year to year. But the real problem isn't having a balanced budget, it's the contractionary fiscal policy governments implement trying to achieve one. When the private sector's strong, contractionary fiscal policy can be a good thing as it can be used to keep inflation low without having to raise interest rates. But when the private sector is weak, as it is now, contractionary fiscal policy damages the private sector and so wrecks economic growth. So the attempt to reach a surplus is doomed to failure, but it causes a lot of collateral damage.

Liquidity expansion helps because it drives down the cost of loans, making more investments profitable.

The trillions that already exist are still circulating – indeed electronic money has to circulate in order to exist, and during the GFC some of them effectively ceased to exist. Since then, with fewer available opportunities to make money, and consumers less certain about future income, less money is being borrowed and spent.

G’day to you Adrian
Some back ground information you may not know. The UK government bonds are at the lowest rate in 320 years. At this moment in time, 11.7 Trillion US$ of world government debt is at less than zero return. The Australian government, like all other governments borrows from their respective central banks which are all private companies. The entire world banking industry is in trouble (who says? They do ) because of historically low interest rates.

So, a few more questions for you. If the entire Forbes billionaires list owns less than 8 trillion, who owns the rest. How is the concentration of wealth in fewer hands good for the economy? Why does money cease to exist if it does not move? Surly the only way it ceases to exist is if a debt is written off. How do pensioners cope in the low interest rate economy? What happens to all governments respective budgets if interest goes back to even 2%?
Chris

G'day again Lofty One,

Despite what some conspiracy theorists' websites claim, all the world's central banks are entirely in the public sector, with the single exception of the US Federal Reserve.

Though the Australian government can borrow directly from the RBA without any ill effects, it instead chooses issue bonds. It is functionally the same, but bond issuance helps maintain bank liquidity, plus there are still a few people under the illusion that borrowing directly from your own central bank risks collapsing the currency.

Money is created by borrowing it from banks. When someone borrows money, the money goes from the bank's bank account to theirs, so the bank effectively still has it. Banks lend borrow amongst themselves, so even when it's spent and goes into someone else's account, the money's effectively still in the bank. And apart from physical cash it all adds up to zero: Nobody has any money unless someone borrows it.

The concentration of wealth in fewer hands is not good for the economy. The policies that allow it to happen could conceivably be good for the economy, though due to the opportunity cost, the claim that they are is extremely dubious. Unfortunately nearly all the politicians are pretty convinced of it, though.

Pensioners cope by spending their pensions.

Interest rates of 2% wouldn't be disastrous for government budgets. It may push them deeper into deficit, but that's not a big problem. But the higher interest rates go, the more it makes sense for governments to tighten fiscal policy. Remember, just because trying to run surpluses is bad in the current economic conditions doesn't make it intrinsically bad.

It is clear that you and I have a very different understanding of how money is created and moves around the world’s economy. So I will pick on just one economy to be more specific. However I want to see what your understanding of the present monetary system that is used around the plant.

Mine is that about 320 years ago William and Mary (king and queen of England) were running out of gold to finance England’s empire plans. So they contacted some local money lenders to see if they could help. And so was born the first central bank in the world, the bank of England. It was 20% owned by the monarch and 80% by the money lenders. This was the birth of the fractional reserve monetary system. If you think this is just a conspiracy theory, check Google.

Japan is heading for a full-blown solvency crisis as the country runs out of local investors (they are dying off). There present government debt is around 10 times the annual budget, Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiraling upwards on an unsustainable trajectory. So when the next generation inherits their parents JGB’s they are likely to cash them in as opposed to roll them over.

As for pensioners I suggest you check out what the state pension is to see if you could live on it. Almost zero returns on our savings is making it very hard.

Chri

The Bank of England did indeed start out in private hands, but was nationalised in 1946. Unlike the Reserve Bank of Australia, which has always been entirely in the public sector.

I'm guessing you believe that governments set the monetary base and fractional reserve banking ensures that the total money supply is some multiple of that. It's a common myth, but completely wrong. How much banks lend has nothing to do with the reserves they hold; it depends on two things: the Basel capital requirements, and how much profitable lending opportunity they find.

To find out more about how money is created, read the explanation on the BoE's website:
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

Japan is not heading for a solvency crisis at all. Like Australia, Japan has its own floating currency. Japan's public debt is all in yen, so it doesn't pose any danger to anyone. Even if they run out of bondholders willing to lend to them, they can always borrow from the BoJ. If in the future the people spend more of their money then Japan will have to tighten its fiscal policy. But that's of little relevance to the current situation.

As for the pension rate, I understand it to be $873.90 per fortnight, or $658.70 per fortnight for couples. Not great, but not terrible either, especially as most pensioners already have their own house. And of course most pensioners supplement it with super.

There are certainly things that governments can do to improve the life of pensioners, but ensuring there's a usury to keep them rich would be very bad policy.

Hi Again
First, thank you for the correction regarding ownership of the central bank of England along with many others.

So money supply no longer any connection to that which is on deposit, is that not likely to cause massive inflation? I did read the small print regarding a term deposit I have with the ANZ. It turns out that ANZ is a company and I am an unsecured creditor if it goes bust. But I digress.

So as I understand it government debt totals around 200-250 trillion US$ worldwide, who is it owed too? Also you don’t believe Olivier Blanchard (ex IMF chief economist) when he says Japan is heading for serious financial trouble. Am I also to understand, that all this fiscal expansion which is inflating many assets beyond the reach of ordinary working folk is not a problem?

My concern regarding pensions is not for people like the baby boomer generation, but the one my daughter is in, many will never own a home, and rents just keep on rising.

Chris

62 Billionaires Own Half the Worlds Wealth
http://www.theguardian.com/business/2016/jan/18/richest-62-billionaires-wealthy-half-world-population-combined

Private Central Banking is a Ponzi Scheme.
http://www.whatreallyhappened.com/WRHARTICLES/fedponzi.php#axzz4J0ZVvQDn

Some good financial videos here.
http://www.youtube.com/channel/UC1rnp-CySclyhxyjA4f14WQ

All the financial data coming out of the US is garbage.
- In fact NOTHING that comes from the US can be trusted anymore.
http://youtu.be/F29bNPN8FTE

Lefty One,
What no one takes into account is that both QE (printing)
and fiddling with interest rates are not working.
These are the main tools used to "adjust" the economy.
The economists are only now starting to realise that these tools no longer work.

It all comes down to the cost of energy.
It has disturbed the whole economic structure.
Oil has gone from US$20 a barrel in 2000 to US$45 today after a
period over US$100 and US$50 is is too low to be profitable.
Coal use is declining due to peaking and political manipulation.
Coal production appears to have peaked worldwide and the alternatives
except gas are very much more expensive.
Until we can fix the energy system, growth will keep declining worldwide.
The money men are now spectators.

Aidan believes that the government debts will never be repaid and he is probably right.

Chris,

It depends what you mean by "massive inflation". The money supply is set by monetary policy (mainly setting interest rates, though it can also include QE) and fiscal policy. Too much money created is likely to result in too much inflation, but that can be counteracted by raising interest rates so that less money is created.

What it won't result in is hyperinflation, aka currency collapse. That is usually the result of governments fixing the currency's value against gold, or the US dollar (like the recent Venezuelan hyperinflation) or another foreign currency. When a currency is overvalued, fixing its value prevents the market from correcting it, and the currency will keep on exporting too little and importing too much until either the government devalues the currency (highly inflationary but not catastrophic) or the government runs out of money so suddenly loses the ability to maintain the currency's value.

Countries with floating currencies are usually completely immune from hyperinflation, but it can still occur if the country has to make large foreign currency debt repayments. The problem is not applicable to Australia, as the Australian government only borrows in Australian dollars.

Yes, you're an unsecured creditor. If your bank went bust, the government would give you some protection, and AIUI you'd be ahead of the bondholders in your claim on the bank's money, but there is still some risk.

Government debt is owed mainly to banks, but also to other corporations, individual bondholders, and other governments.

Fiscal expansion would be a problem if it were inflating many assets beyond the reach of ordinary working folk. But it is not. Inflation has been consistently low in Japan and is low globally. Fiscal contraction is what really disadvantages ordinary working folk.

And the superannuation system has been in place long enough that generations after yours should be able to rely on it to supplement their pensions. Although of course there are some unaffordable locations.

Bazz,
QE and interest rate adjustments are working as much as could be expected, but there's not much they can do while fiscal policy's this tight. People and businesses are sensibly reluctant to borrow money at times when they're not confident they can make money.

Oil is a declining sector of the economy, but there are plenty of alternatives, and the cost of wind and solar power is dropping rapidly. We're not running out of energy. And while fluctuating oil prices can certainly cause problems (as they did in the 1970s) they're not what's currently limiting economic growth. The reluctance of governments to borrow is.

Aiden
By your answers, I am guessing you are employed in banking or the finance industry, as you seem very knowledgeable and comfortable with how things are going in the financial world at the moment.

So a few more questions. You explained that government debt is owned by banks (that are owned by individuals), corporations (that are owned by individuals) and some other governments.

As you have not commented on my statement that the present amount of money/debt in circulation is in the 200 to 250t US$ range, I assume you agree with me. My research tells me that there are about 40t US$ in the worlds collective pension funds, and forbs billionaire list tops out at about 4.5t US$. So my question is, who are the individuals/families who own the rest? I notice that almost all the names on the list are new money, as opposed to the wealthy family’s pre WW2.

As you skipped my comment about Japans debt being unsustainably high, am I to believe that you think there is no such thing as to much debt, as long as an economy has something to sell to the rest of the world?

What are your thoughts on the IMF’s use of their SDR’s to solve the next GFC when it arrives?

With any companies balance sheet, anything owned by the company is an asset, and any debts they have are listed as liabilities. However banks seem to function the other way around. My deposit at the ANZ is listed on theirs as an asset, why is that?
Chris

Bazz
I agree with the first part of your post. However my belief is the main reason for the growth in the world’s economy grinding to a halt is that all the surplus income is in the hands of the 1%, who have little need to spend it in a way that will boost the economy. As opposed to all the unmet needs of many in the 99% that have no surplus cash to spend.

I think we are not far away from having infinity bonds. That is a loan the lender understands that the capital will never be paid back.

Helicopter Ben was in Japan recently talking to the governor of the BOJ about that very idea. I think for some who always roll over their TD’s it would make a lot of sense as long as they got a better return than the regular TD's that are in the toilet rate wise at the moment .
Chris

Lefty One,
In your answer to Aidan you said;
My deposit at the ANZ is listed on theirs as an asset, why is that ?

This is because the Financial Stability Board can use your deposit
to pay the debts of the bank.
There are a few catches to everything. The Australian government will
guarantee your deposit up to AU$250,000. Everything the FSB takes over
$250k is not covered. There is a further catch, there is a limit of
$20 billion per institution. B$20 would not go far in the major banks.
Further question, would the FSB take the money in alphabetic order or
a proportion from all depositors ? I have not seen a rule for that.
So the answer is distribute your savings among building societies and
smaller banks. Just make sure the Society is not owned by a major bank
as the FSB collection applies to all subsidiaries. eg Westpac/St George.

Infinity Bonds, now that is a new one on me. You would need to be
fairly young and be in no need of money to buy a house etc.
You also would have to have a lot of confidence that the bond issuer
would never for any reason disappear out of sight.
That would be the biggest gamble you ever made.

Bazz
To be honest it was a rhetorical question, I just thought it might start others thinking about the Lehman brothers collapse, which had billion’s in assets listed on its books. The thing people need to keep an eye on is what happened in Cyprus a few years ago. When it comes to finance Australia is not an island, it is linked to the rest of the world.

So if the GFC is repeated, who will be the back stop, and bail out the system. I am guessing the IMF who will use the latest tool in the bag, SDR’s. China has just been accepted as the latest currency to be convertible in to SDR’s. If you want to know where to watch it is the US, not Australia. The US debt Is close to 35T US$, if you add federal, state, local, and personal together. On top of that is unfunded liabilities that politicians love to hand out to potential voters. The dam at the top of the river is the US; if it goes we are all going to get very wet.

Infinity bonds (my label)are an idea floated by helicopter Ben during his visit a month or two ago to Kuroda at the JCB. These would be aimed at pension funds whose focus is income not capital. If offered by the IMF who would challenge their credibility. I mean a bunch of unelected bureaucrats, accountable to no one, what could possibly go wrong?
Chris

Lefty, when you said Bail Out I presume you meant Bail In.
Yes it was the FSB that operated in Cyprus and also on the Portuguese Bank.
Wayne Swan signed us up to it in 2012 and was confirmed at the 2014
G20 in Brisbane by Joe Hockey.
Perhaps you did not hear the story about the Russian Oligarchs and
the Cyprus Bank affair.
They got wind of what the Financial Stability Board was about to do
in Cyprus, so they went into the Moscow Branches of the Cyprus Banks
and pulled their money out.
When the STB arrived the next morning to take over the banks the
private Cyprus banks cupboards were bare and there was a lot less
money to pay off the dud Greek Bank bonds that had been sold by the Cyprus Banks.
Well I think that sooner or later it will be realised that those
debts will never be repaid, so your infinity bonds already exist in
a very big way.
As far as the IMF & SDRs are concerned they will probably not even
worth being used as wall paper.
Just what are they "Magic Dollars" ?
Probably just another form of pixel money.

Here is a $1,000,000 just be careful how you spend it !

Cynical Bazz

Bazz
Yes bail ins. Thanks for filling in the gaps although I was aware of most of the happening in Cyprus. I am fortunate to live where cash is king and many do not have a bank accounts.
Thanks for the pix elated money, I will just nip across the road to the china shop for a kilo of no 8 nails, I am sure he will be impressed.
Chris

Hey; You forgot your change !

Lofty One,

No, I'm not employed in banking or finance. And from watching ABC's The Business, it's clear that many of the people who are don't realise what's going on.

The reason I didn't comment on your statement about money/debt in circulation is because I didn't know the answer off hand, and I don't think the figure itself is that important. But I've checked and you seem to be right (though it does depend on how you define money).

I'm not really sure who owns how much, but don't forget that market capitalisation of companies doesn't always tell you how much money's involved.

Japan's debt is not unsustainably high. So long as a country's debt is in a floating currency that it issues, there is no such thing as too much debt. It doesn't even depend on the balance of trade.

It would be appropriate for the IMF to use special drawing rights to counteract the next GFC in countries that aren't in a position to solve the problem themselves. However the IMF itself is an anachronism, and with hindsight it would've been far better to have avoided the need for its creation in the first place. A much better solution would be to encourage all countries to float their currencies. Once they've done that, there's really no need for the IMF.

Another reason the ANZ regards your deposit as an asset is that they're likely to make a profit on it!

Infinity bonds are a bad idea IMO. Japan can always afford to pay back the capital to the bondholders. All it requires is the issuance of new bonds to replace the old ones.

Aidan
I will take your new name for me as a typo, a compliment, or your sense of humor.

I agree there is a false group think belief in the industry, that all is well and that the problems are behind us.

Money by my definition is the same as all the debt that exists.

“ Japans debt is not a problem”, I am sure you are aware there are many who would vehemently disagree with you. So why do you think governments tax their citizens, when all they need to do is borrow to pay its bills?

I agree IMF is an anachronism, and accountable to no one. However I don’t think floating currencies is the answer, as the world is full of the George Soros’s who would play the market to the detriment of all but themselves concerned.

I am sure they do make a profit on it, but as they don’t own it, it is a loan and therefore a liability; ask anyone who has a mortgage. The problem with this anomaly is it causes confusion in the general public as they don’t understand how a company can be bankrupt, when they have all these assets listed in their financial statements.

Our view is unlikely to affect the future of the idea; however I could see how it would appeal to some. Robbing Peter to pay Paul is a merry go round that has been tried many time by institutions and individuals alike. The problem arises when people’s confidence in the currency/solvency collapses and all the crediters head for the exit at the same time.
Chris

Lefty & Aidan, just what IS an IMF drawing right ?
Is it an IOU that the recipient country signs ?

Is it real ?
Is it just pixel money ?

Bazz
It is just like any other fiat currency.It works as money as long as people accept it and can pass it on to another person who accepts it.
So like every other currency used in history , back to the days of feathers and shells it works till it doesn't.

Chris

Lofty/LEFTY ONE/Chris
Now that you've got my name right at last, what would you like me to call you?

The groupthink is worse than the belief that all is well. It's the belief that we can't do any better than we are, and that governments will some day need to reach a position of zero debt.

Governments impose taxes to fund things. Without taxes to create a demand for it, the money they issue would have negligible value. And without taxes to take money out of the economy, government spending would be far more inflationary than it currently is. And just because there's no limit to the amount a country can borrow doesn't mean there's no consequence. Running too big a deficit is too inflationary.

Fixed currencies are much more susceptible to attack than floating currencies. With floating currencies you're just as likely to lose money than make it, and you generally can't make money by betting on the currency reading a value that it's not likely to reach if you do nothing. Whereas with fixed currencies, it's relatively easy for currency speculators to get rich at the expense of the government that's fixing the currency. With the single exception of China, which has enormous ability to defend its currency's value, all fixed currencies are vulnerable to attack. And even China would be better off floating its currency IMO.

What is it you regard as "robbing Peter to pay Paul"?

If Japan borrowed US dollars (or any other foreign currency) then all the creditors heading for the exit would be a serious problem. But Japan only borrows in Yen. If the Yen falls, that's their creditors' problem not theirs. And the value of floating currencies is self correcting; the lower the yen goes the more it favours exports and the better an investment it becomes.

BTW your answer to Bazz is completely wrong. Special drawing rights are not a fiat currency, firstly because there's no fiat (as nobody demands taxes be paid in that currency) and secondly because they're not a currency, they're a basket of currencies. See https://en.wikipedia.org/wiki/Special_drawing_rights

Aidan
You choose.
As you are aware zero debt was achieved in Australia’s history. I can’t remember when or for how long. It is also a fact as money and debt are two sides of the same coin; if all debts were paid off then there would be no money.
I am sorry I don’t understand the first couple of lines, Could you rephrase it.

As the present governments are collectively creating trillions in extra liquidity why is inflation so low?

Have a read of the time Soros broke the bank of England a while back, and see if you think there is no money to be made in currency trading. There are many traders in the industry who make millions a year using algorithmic programs on computers. China along with a few other with fat sovereign wealth funds have an advantage, but the sharks are happy just being in the middle of every time money moves from one currency to the another millions of times a day.

My analogy I guess was a bit to obscure. What I meant was that if you owe a person money and they ask for it back and you don’t have it, what can you do. One solution is borrow from someone else. Or as is done with most big loans such as mortgages/bonds, you simple roll them to the same person.

In Japans case it now owes more than 10 times its annual budget, which has never been done before. You might like to check out how much of the entire stock listed on the stock market, has been bought by the JCB. Japan is the world’s 3rd largest economy, but it seems the JCB is the only one buying any financial product. While it is true that a lower Yen means they can sell more Toyota's etc.

You might also be interested to know how they sell Japanese made Toyota's for 25,000 dollars when the same product made in their Thailand or South African factories sell for 15,000 dollars
Chris

Cont’
So to you’re finally point that I am completely wrong about SDR’s. I read the Wikipedia link, but could find no reference regarding taxation. As I am sure you are aware a fiat currency is one that has no backing of physical worth, I believe the last currency remotely tied to anything was Switzerland (25% gold) , but it is not one of the those convertible to SDR’s.
So they are handed out as is seen fit and their value is based on a basket of fiat currencies, so please explain in your own words why it is not a fiat currency.
Chris

Lefty,

More by good luck than anything else, the Howard government, with Peter Costello as treasurer, achieved zero net government debt. But there was still plenty of money around because there was a record amount of private debt.

Right now inflation's so low because the private sector's reluctant to borrow.

When Soros made his billions at the BoE's expense, the pound was not freely floating. Instead the government were manipulating its value to keep it in the Exchange Rate Mechanism at the (rather high) rate that they'd chosen to join the Euro at. His actions forced Britain out of the ERM, and the pound refloated. And taking the long view, his actions helped Britain, as it never joined the Euro which would've been a far worse fate.

Currency traders make or lose money effectively betting on the future value of a currency. They make far more money when a nation is trying to keep the currency above market value.

Borrowing is not robbing. Your analogy fails.

Japan's central bank is the Bank Of Japan.

And yes, I would be interested to know how they sell Japanese made Toyota's for 25,000 dollars when the same product made in their Thailand or South African factories sell for 15,000 dollars. I'm guessing they have substantial trade barriers?

Fiat currency is backed by government decree (which is what "fiat" means) that it is valid for settling debts. Taxation then gives it its value by creating the debts, and therefore a demand for the currency. Currencies like Bitcoin have no physical worth but are not fiat currencies; their value is purely speculative.

http://en.wikipedia.org/wiki/Special_drawing_rights specifically says they're "not a currency per se". It also says:
One reason XDRs may not see much use as foreign exchange reserve assets is that they must be exchanged into a currency before use. This is due in part to the fact private parties do not hold XDRs: they are only used and held by IMF member countries, the IMF itself, and a select few organizations licensed to do so by the IMF.

Aidan and Bazz

SDR’s came into the thinking at the financial wizards in the 1944 Breton woods meeting when they were planing the post ww2 financial system. They first appeared in 1969, and were created out of thin air by the IMF to help smooth out the financial crises of the day. The last allocation was in 2009 to steady the effects of 2008 GFC which nearly shut down the entire financial system worldwide.

SDR’s are not as you say a fiat currency; in that. when they are created there is no counter party liability as with national currencies. I would argue that makes their creation even more troubling than quantitative easing. They are by definition of the US accounting office annual report an asset, along with paper gold (which is a whole other story) equably troubling to me. These invented products are IMO created to give the illusion a country is not broke when it is.

The US$ is the reserve currency of the world, which took over from the fading empire of Great Britain in 1913, the same year the FED was created. As the owner of the reserve currency, everyone else has to swap their currency to buy any real asset (stuff), because all stuff is priced internationally in the reserve currency of the day.

In resent time there have been three men who challenged the idea that the all mighty dollar could not be pushed of its lofty perch.

They were Strauss-Khan, Qaddafi, and Hussein all three were removed one way or another from positions of influence on the world stage. Now before you attack me for being a conspiracy wing nut, please do a little research in the financial ideas all three were working on at the time of their demise, and you will find had their idea’s been implemented, the almighty dollar would have lost a lot of its influence on the world’s financial stage, thus throwing the US economy into even more trouble than it is at the moment.
Chris

Lefty,

With currency trades now done in milliseconds it makes very little difference what currency commodities are sold in. And while reserve currency status does boost the short term value of the US dollar, the effect is very small. Someone else selling oil in Euros, for example, would have no noticeable effect. Indeed far from being worth fighting a war over, the effects of even a total loss of reserve status would be virtually forgotten within a year.

I stand by my earlier comment:
It would be appropriate for the IMF to use special drawing rights to counteract the next GFC in countries that aren't in a position to solve the problem themselves. However the IMF itself is an anachronism, and with hindsight it would've been far better to have avoided the need for its creation in the first place. A much better solution would be to encourage all countries to float their currencies. Once they've done that, there's really no need for the IMF.

Aidan
And now to your other points

Inflation/interest is low to persuade people not to save, because it slows growth.

Your point is well made regarding to fix or not idea. I live in a poor country that is pegged to the US dollar. I am guessing the Soros types don’t manipulate it because it is too small. It did use to float, and from 1996 to 2000 it went down to 10% of its original value.

Your right, I think the Euro is on life support and only survives because the ECB broke its original rules not to turn itself in to money creating institution.
However the day to day exchanging between currencies is a very lucrative endeavor for the banks and their over paid employees. These trades are computer driven by algorithm programs with nano second frequency and rarely lose.

This was a favorite saying of my mother, used whenever I juggled my first loans. So it is a saying not an analogy, I sit corrected.

Point noted.

WTO does not allow trade barriers.
When I was living in NZ I did a bit of research and found that the cost of a new Vigo at the local dealership was about 10 grand more than the cost in Thailand shipping included. So I applied for permission to import one from Thailand. Turns out that to import one from anywhere other than Japan, I needed a certificate from the senior engineer of the factory who produced it to say it was technically the same as in Japan. As these factories are just assembly plants there is no difference. So I asked the agent I was talking to as to why I had to do that when there is no difference. He said and I quote “now you know why Toyota give tens of millions of dollars to put its name on the black boat sail”.

The value of all currencies is speculative and they have no intrinsic value other than our belief at the time it will be accepted by another party for stuff, debt repayment, and taxes.
Chris

Aidan
Then I guess we will just have to agree to differ, as all opinion is based on ones interpretation of "facts".As you have not commented on the demise of the three world players I assume you think it’s of no consequence, fair enough. So I think we are reaching the end of our sharing on this blog. All our views are IMO as there is much that goes on at the top table we have no knowledge of. I hope to hear from you again on another thread.
Chris