Why Nations Need Currency Controls

If you don’t put in currency controls, “social democrat” and “liberal” George Soros will sweep in and speculate on your currency so as to ruin your currency and destroy your economy. He will do this if you do not do what this Jew orders you to do. Soros has already destroyed a number of economies around the world, especially in Indonesia, Malaysia and Mexico.

Soros’ “social democratic” pals in Berlin recently pulled the same fast one on Belarus by speculating on its currency, ruining its value and wrecking the economy. Hence socialist Lukashenko has had to go hat in hand to the IMF and World Bank for loans. The Germans probably took out Belarus because they actually do have a socialist system in that country, and there’s nothing the EU “social democrats” want to destroy more than a socialist country in Europe.

1 Comment

Filed under Asia, Belarus, Economics, Europe, Germany, Indonesia, Latin America, Malaysia, Mexico, Regional, SE Asia, Socialism

One response to “Why Nations Need Currency Controls

  1. James Schipper

    Dear Robert

    Currency speculators don’t really ruin currencies. What they do is cause excessive fluctuation, whereby the exchange rate no longer bears any relation to trade realities. The basic rule is that a currency should lose value if a country has a higher inflation rate than its trading partners, if a country is becoming less competitive or if the prices of a countries exports are falling or the prices of its imports are rising.

    Suppose that there are only 2 countries: Brazil and the US. In a given period, inflation in the US was 20% and in Brazil 50%. If at the beginning of the period the real was worth 0.5 USD, then at the end of the period, the real should be worth 0.4 USD, 0.5 × 1.2 ÷ 1.5 = 0.4. At that value, the real exchange rate has remained the same. The nominal value of the real fell, but that was necessary to compensate for the fact that Brazil has higher inflation.

    The right exchange rate is the one at which there is an equilibrium between exports and imports. Short-term capital flows make a mockery of that. To get back to our example, if Brazil, due to its higher inflation rate, has higher interest rates, then there may a massive inflow of short-term capital to take advantage of that. This will drive up the value of the real, when it should be falling.

    Rigid controls on cross-border capital flows are essential to avoid exchange rate fluctuations which are damaging to trade and can be ruinous to many industries. If a country’s currency should be falling but is in fact rising because of a massive inflow of short-term capital, then the export sector is hit with a heavy blow, from which it may never recover.

    People used to understand that, even if long-term investment in a country should be free, the short-term capital flows should be tightly regulated. Unfortunately, the neoliberal pests convinced policy-makers all over the world that there should be completely free cross-border capital flows.

    Regards. James

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