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Global Currency Wars

Discussion in 'Property Market Economics' started by Tekoz, 16th Mar, 2016.

  1. Tekoz

    Tekoz Well-Known Member

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    Hi All,

    Does anyone know if Global Currency Wars (race to the bottom – Currency devaluation) can be devastating to AUD$ ?

    WHY do Central Banks want to devalue a nation’s currency?

    The primary reason/ objective is with a devalued currency the nation will be able to
    - EXPORT DEFLATION to other countries,
    - be more economically competitive and thus promote EXPORT because of low currency value....
    As expected, Mr Super Mario Draghi (Governor of the European Central Bank) just announces the following
    - cut its main interest rate from 0.05% to 0%
    - cut its bank deposit rate, from minus 0.3% to minus 0.4%.
    - expand its quantitative easing programme (AKA Money Printing) from €60bn to €80bn a month.

    Also Reserve Bank of New Zealand (RBNZ) cut it’s interest rate from 2.5% to 2.25%. New Zealand economy is similar to Australia – Commodity base.

    Source: New Zealand just stunned markets by cutting rates

    The actions of the these central banks causes their currency to devalue while the AUD$ rises. This cause a dilemma for the RBA and the next move will definitely be a rate cut by the Reserve Bank of Australia to devalue the $AUD.

    What do you reckon ? any kind of comments would be greatly appreciated.
     
  2. MarkB

    MarkB Some guy on the internet Premium Member

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    Definitely?

    Imo, they'll sit for a while longer. Beyond that, it is anyone's guess. But there is no definite rate cut in the future.

    See: RBA Bets Shift Toward Keeping Rates on Hold
     
    Last edited: 17th Mar, 2016
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  3. skuzy

    skuzy Well-Known Member

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    watching with interest. considering the number of posts in my previous thread about global economics.
     
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  4. barnes

    barnes Well-Known Member

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    The rally in AUD that happened now is pretty bad for this economy. RBA should cut as soon as possible and promise to cut in the future.
     
  5. Azazel

    Azazel Well-Known Member

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    I think when the yuan was going low a few years ago, the yankees were crying foul, but it didn't seem to do anything to ours at the time.
     
  6. Blacky

    Blacky Well-Known Member

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    I pretty sure that was a severe case of 'pot calling the kettle black'.

    Most international statements which come out from the US are highly hypocritical.

    Blacky
     
  7. Azazel

    Azazel Well-Known Member

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    Yeah, I think so.
    And the US is allowed to print as much as they want.
     
  8. Ted Varrick

    Ted Varrick Well-Known Member

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    Head out to Hill End and start panning for gold.

    Then convert into Blackmores or A2 milk stock.
     
  9. Azazel

    Azazel Well-Known Member

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    Whatever happened to the good old Mum n Dad spruiked as can't fail BHP and Dick Smith?
    The smart money is in milk eh...
     
  10. MarkB

    MarkB Some guy on the internet Premium Member

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    A reference to the US Federal Reserve ?

    The Fed didn't actually "print money". What they did was purchase some (admittedly questionable) assets that were sitting on banks balance sheets. It had the same effect as increasing the money supply since it flushed some much needed liquidity into the system, but it was not as crude as literally running the printing presses. However, it did take away from the "you f***ed up, now you must pay the price of your mistake" aspect of the free market.
     
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  11. Azazel

    Azazel Well-Known Member

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    How do we know that they didn't though?
     
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  12. MarkB

    MarkB Some guy on the internet Premium Member

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    Is the Federal Reserve printing money in order to buy Treasury securities?

    I guess if you want to be really suspicious, we don't know.

    But I don't suit Tin Foil Hats.

    Do you?

    Like I said before, what they claim they did was purchase some questionable assets that were sitting on banks balance sheets. In doing so it removes the usual "you f***ed up, now you must pay the price of your mistake" aspect of the free market. That's arguably worse than letting the fools fail (I guess it could be an economic case of "the cover up being worse than the crime"). So maybe it would've be better if all they did was print truckloads of money. But I very much doubt it was the case.
     
    Last edited: 18th Mar, 2016
  13. Azazel

    Azazel Well-Known Member

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    How much do you trust the US?
    I've seen their track record.
    Was there WMD's? Did they have a finger in Cocaine trafficking? Iran Contra?
    Such a conspiracy theorist.
     
  14. MarkB

    MarkB Some guy on the internet Premium Member

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  15. Aaron Sice

    Aaron Sice Well-Known Member

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    Expect 80c then. April Fool on them.

    I don't think there should be any mention on tinfoil hats with currency devals. It's real and it's happening.

    Plus, technically calling someone's position a "theory" recognises it as reasonably accurate...

    [​IMG]
     
    Last edited: 23rd Mar, 2016
  16. MarkB

    MarkB Some guy on the internet Premium Member

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  17. willair

    willair Well-Known Member Premium Member

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  18. Tekoz

    Tekoz Well-Known Member

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    Hi @Aaron Sice the picture at the end of your thread is not showing up properly ?
     
  19. Kate Moloney

    Kate Moloney Well-Known Member

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  20. Kate Moloney

    Kate Moloney Well-Known Member

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    The RBA will just do what the Fed and BOJ and Eurozone do ... its a race to the bottom. What one country does another will be forced to follow otherwise it will hurt their economy. Its happened throughout history and will keep on happening.

    The negative interest rates in Europe are interesting to watch. It seems like its a big experiment at the moment as the central bankers try to force the people to spend money and jump start the economy....
     
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