Hey there everybody. I have a really basic question regarding the Austrian theory and the competitive devaluations we see today. Often you hear in the news/papers, with the swiss franc fix to the euro being a good recent example, that a country is hurting due to an ‘overvalued’ currency. Now havin…

from Human Action: http://mises.org/resources.aspx?Id=4506fc1c-f94e-47bc-a1f1-99be0865979a

The “exporters are hurting from the strong currency” argument is idiotic. Assume a currency strenghtens (rises in value, i.e. is devalued less) against all others (like the Swiss Franc CHF was recently). If CHF’s strength becomes “too” large, what’s stopping the Swiss (firms, individuals – exporters…

It all goes back to taxation. Why do governments want their countries to be “exporter nations”? Because the government taxes all cash flows within the economy it controls and the more money flowing in (via exports) means the more money there is to be taxed. By subsidizing its exporters on the backs …

Competitive devaluation/currency wars

Economics Economics Questions

John_James September 7, 2011, 1:14pm 4

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Competitive devaluation/currency wars

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