Saturday, June 15, 2013

False rumor, prejudice, blind spots 2; a rumor of the economy 2

This time, I show that an epoch-making theory is dangerous.

About "An exchange rate is decided by the ratio between the money supply of Japanese Yen and U.S. dollar."

This is a remark of the popular person of the group of reflation.
He says it is very easy to make weak yen, and central bank should print paper money rapidly.
He grieves, because the people who do not understand even such a thing do politics.

It is very simple and wonderful, or another.





In the first place, why is the ratio of the money supply between two countries decided?

Is it a ratio of the national land and the population between the two countries?

Once, the world experienced a stagflation that proceeded simultaneously with a high inflation and a high unemployment, and each central bank controlled money supply in tandem with the economic growth.
Half a century ago,in addition, the American and European countries came into currency devaluation competition to get the advantage of domestic export, and the world economy was slowed down terribly.
To add to our concern, the expectation of the market price (animal spirit) controls most.




The current exchange market changes dramatically by a short of the exchange of one hedge fund, such as Thai Bhat suddenly tumbled down at 1997.
George Soros of the ringleader says.
“Sometime, because somebody noticed a weak point of Thai Bhat and would carry it out, I had only done it first.”
In conclusion, the exchange rate is a result of the dealings among the government, the central bank, speculators, and companies of each country.



We have to pay attention to any debater who say simple with certainty and talk exaggeratedly.

He only had said to an obese person, " Your levels of neutral fat are only 20% more than the national average."
A period of the graphs of his book was only a convenient period for him.
It was from 2007 to 2011 in the mentioned above graph.

We should understand the opinion while having doubt on the intention of an author.




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