"Such a collapse is impossible here where the currency value is set by the market."

Aidan's right. We can't have that type of collapse. Our collapse will look quite different. Instead of the unofficial market recording the decline in the currency, we'll have what Aidan laughingly calls a series of competitive devaluations. The same net effect but it'll look more controlled.

We'll end up in roughly the same place but via a different path.

Of coarse, since the decline will be less chaotic, there will be a chance that we'll come to our senses and recognise that irresponsible borrowing against the future is an unsustainable ponzi scheme promoted by those who refuse to have their spending limited by mere reality.

Lightning strikes so we want every thing built bullet proof?
Belly,
No, we just need cash in case for when lightning strikes again.

mhaze
>Our collapse will look quite different.
We won't collapse at all. Even if the market decides we're worth less than before, it will be business as usual.

>Instead of the unofficial market recording the decline in the currency, we'll have what Aidan laughingly
>calls a series of competitive devaluations. The same net effect but it'll look more controlled.
No. A "series of competitive devaluations" implies a non continuous process, as a country with a managed exchange rate would do if it saw the trouble ahead and sought to avoid it.

What we'd have instead is market led competitive devaluation, which is similar but far less inflationary. Importantly it is self limiting - if our dollar goes down, it makes us more internationally competitive - our exports get cheaper so we'll sell more, and our imports will get more expensive so we'll buy less. Of course this isn't how we want to make ourselves more internationally competitive, but it's a lot better than trying to achieve the same result by slashing wages.

>We'll end up in roughly the same place but via a different path.
Now that I've explained it, can you see how idiotic that comment is?

While the thread is about some thing else that crash is coming
Household debt, house prices in decline, a fact interest rates must rise again
only the time is unknown

Do try to grow up Aidan, & use a bit of common sense. Your posts sound like some kid who has just finished a Uni economics course, & actually believed your lecturers had some idea of which way was up.

Did they tell you "if our dollar goes down, it makes us more internationally competitive our exports get cheaper so we'll sell more." Nice idea, what do you suggest we should sell. How about cars? Ops, we don't make them any more, our labour costs killed those. OK, TVs & electrical stuff. Hang on, we don't make them any more either.

More coal & Iron ore then, great idea, if we weren't selling all we can dig as quickly as we cab dig it. Then if someone wants to open a new mine, the greenies make it so hard & long winded a process only a fool would do it.

We sell all the wheat & other broad acre crops we can grow, & are now importing fruit & vegetables as costs make ours are too expensive. We have to export our livestock live, as our abattoir costs are totally non competitive. Hell even with the longest coastline in the world, we have to import our fish, due to some greenie induced stupidity.

So tell me Aidan, in other than broad sweeping fool statements, just what exports would a lower dollar encourage? Come on, speak up or stop it with the grandiose bulldust.

Thanks Hasbeen. I was struggling to keep my response under 350 but you've covered half my points.

Aidan,

"Now that I've explained it, can you see how idiotic that comment is?"

You haven't explained it, you made a series of unsupported assertions that are mere hopes about how things would work out.

"No. A "series of competitive devaluations" implies a non continuous process, "

Why does it imply that? In the real world devaluations even of floating currencies goes in stages. eg we didn't get to US0.70 from parity in a smooth flow but by a series of drops followed by a hiatus, followed by further drops.

"but it's a lot better than trying to achieve the same result by slashing wages."

Well no one was talking about slashing wages but nice deflection. But now that you raise it, a devaluation isn't better than slashing wages, its the same. Slash wages and people must buy less. Devalue and prices of imports rise - people buy less. Not only that but things we don't import become more expensive because (1) input costs rise and (2) supply potentially decreases as producers sell more overseas.

Aidan, I get that you and your ilk want to avoid the discipline of not borrowing against the future - spend now, let someone else worry about it later. But the bill will come. It will come in the form of higher inflation, higher interest rates and reduced living standards. At some point, either discipline will be imposed (and those doing so will be tagged as cruel) or spiralling economic decline will ensue. Venezuela is worst case. But Greece is very much on the horizon.