(March 22, 2011 at 2:35 pm)Ashendant Wrote: A devaluing currency tends to increase exports
That's why the german had a industrial boom during the sovereign debt crysis, the euro is overvalued anyway
That's not the case in a lot of circumstances, especially in countries where a lot of the raw materials are imported, the less value the currency has the more it costs to buy the products you need.
Also, low currency = less exports is one of the biggest myths in economics.
Peter Schiff Wrote:Conventional wisdom is that a weakening currency is a boon for economic growth and exports; however, history does not support this view.
For example, during the 20-year period from 1971 to 1991 - often referred to now as an economic miracle - the Japanese yen tripled in value against the dollar, an average appreciation rate of about 10% per year. This increasing purchasing power enabled the Japanese to enjoy steady economic growth and rising living standards. Over that time, Japan’s GDP grew at an average rate of 4.5% and net exports increased fivefold. Government debt as a percentage of GDP fell slightly to about 20%.
Over the following 20 years, from 1991 – 2011, the Japanese economy has been dead in the water. Yen appreciation slowed considerably, with the currency rising by approximately 50% against the dollar, or about 2.5% per year. However, over that time, the Japanese economy and net export growth essentially stagnated, with GDP growing by less than 1% per annum and government debt exploding to over 120% of GDP.
http://peterschiffblog.blogspot.com/2011...nomic.html
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