Аннотация: Two versions of the sharp fall in the exchange rate (of imperial currency): a naive and a conspirological . A fantastic economic essay.
Two versions of the sharp fall in the exchange rate (of imperial currency): a naive and a conspirological. A fantastic economic essay.
March 2022 is a time when many people are pondering the "secrets" of the exchange rate movement.
Why does the exchange rate rise or fall sharply?
Let's try to reason - in the manner of fantastic constructions.
Let's say there is an Asian Power, and in this power there is a currency: it is called "imperial" ("imperial currency").
Year go after year. Prices in the Asian Power are rising. And the Central Bank of the Asian power is trying with all its might to ensure that the exchange rate of the imperial against world currencies does not decrease. Very strange. If prices rise, then this is evidence of currency depreciation... The Central Bank is not inclined to a gradual, smooth depreciation of the imperial. A huge latent energy (a huge latent potential) of a sharp, sudden drop in the exchange rate was created.
Why is there a policy of keeping the exchange rate of the imperial currency at a stable level?
Version one: naive.
Stupid patriots work in the leadership of the Asian Power. These people, to the extent of their stupidity, are trying to raise the prestige of their native country. But how to raise prestige? How to improve her reputation? Stupid patriots choose a strange way: they try to keep the course of the imperial at the same (unchanged) level. And then they call on the citizens of the Asian Power and other countries to admire the stable currency - the imperial.
However, the day comes, and the rate of the imperial currency falls sharply.
There is a very important detail in this event. The course of the imperial fell suddenly - without any preparation, without any warnings and forecasts. Half of the gold reserves of the Asian Power were transported by a ship. Quite by chance, an underground earthquake occurred in the sea. The ship with half the gold reserves capsized and sank.
So, the rate of the imperial suddenly fell.
The occasion ( reason) was accidental, and the event itself was natural and inevitable.
What happened next?
The Central Bank of the Asian Power takes measures:
1. The Central Bank raises the discount rate - to such a value that makes it unprofitable to lend to the economy. But, apparently, the economy for this state is in the background. In the foreground are the rates on bank deposits. Income from bank deposits is increasing (at first glance).
2. The Central Bank is trying to increase the rate of the imperial currency. Like, to return it to the "original" (initial) values. Of course, this rise in the exchange rate of the imperial (even if it is achieved to some extent) is not a consequence of success in the economy, but is the result of administrative efforts.
Somehow this is not very similar to stupid patriots. Foolish patriots would first of all be engaged in the punishment of persons who decided to transport the gold reserve by ship, and not by train. Secondly, they would glorify the labor heroism of the people, who are able to achieve great success in adverse conditions ...
If the version of the "stupid patriots" is not very suitable, then what version can look more convincing?
Maybe a super-rentier version? Let us suppose that there is a group of people who place huge deposits in some bank of the Asian Power and receive huge profits from these deposits. For these people, both a stable exchange rate of the imperial, and an "unshakable" imperial, and high rates of payments on deposits are important.
Of course, the movement of the exchange rate is a complex process. Therefore, no one is forbidden to think, invent and present more and more new versions ...
March 21, 2022 12:04
Translation from Russian into English: March 21, 2022 12:43.
Владимир Владимирович Залесский 'Две версии резкого падения курса валюты (империала): наивная и конспирологическая. Фантастический экономический очерк'.
{ 2866. Две версии резкого падения курса валюты (империала): наивная и конспирологическая. Фантастический экономический очерк.
MMDCCCXXXVI. Two versions of the sharp fall in the exchange rate (of imperial currency): a naive and a conspirological. A fantastic economic essay. }