What if someone wants a new currency?

Discussion in 'Economics & Trade' started by The Big Buddha, Sep 9, 2011.

  1. The Big Buddha

    The Big Buddha New Member

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    hi there,

    im Chris from germany, so please excuse any grammitcal mistakes i make :)

    what im interested in is, what would happen (and how would it happen) if someone wants a new currency forany country?
    how is it count?

    what if we europeans would throw the euro away and (in germany) we would bring in, again, the german mark!? 1:1

    how do the currency rates develop? ( for expample: 1 $ = 1,41 € or the other way... ;) )

    can somebody explain that to me?? how is the difference between them rise to 1 $ = 1,5 € ??? i have an idea but first i want to hear it from another person.... ;)

    so, please explain it to me thanks! :winner:
     
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  2. Inphormer

    Inphormer Banned

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    The German central bank can set the initial exchange rate to anything it wants. If it exchanges Euros for New Marks at 1:1 the next day the New Mark will be worth more than the Europe as people sell Euros and buy Marks around the world. The free market will determine how much your New Mark is worth in the long run.
     
  3. unrealist42

    unrealist42 New Member

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    I do not know why you would want to abandon the Euro. It was orginally issued at 1Euro to $1US, dropped to $0.80 but recovered, gained 40% in a decade and is now, even with the problems with the PIIGS, maintaining its worth in the world.

    The last thing Germany wants to do is have its own currency. It would appreciate so much so fast that German exports would be priced out. It is only the Euro that allows the German economy to mantain its economic position. Bailing out Greece is a small price to pay for that.
     
  4. SmokemoNSC

    SmokemoNSC New Member

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    They should abandon the Euro because it's fiat =p
     
  5. Inphormer

    Inphormer Banned

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    Inflation.

    By having the ECB set one interest rate for such disparate economies everyone gets screwed. If the German economy starts overheating and there is local inflation you can't combat it without the ECB raising interest rates. If they raise interest rates Greece's anemic debt ladened economy gets screwed. So what are you supposed to do?
     
  6. unrealist42

    unrealist42 New Member

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    The US is about as economically diverse as the EU. It has a northern technological manufacturing base much like northern Europe where incomes are high and populations stable. It has a southern tier with increasing populations where wages and incomes are generally lower but, until recently economies were growing rapidly. it has areas that experienced housing booms. Spain's housing boom is very similar to that of Arizona and Las Vegas. Despite what many think the US is not a monolithic economy, it is very much a collection of regional economies.

    US monetary policy, like that of the EU, has vastly different effects on regional economies with some areas benefiting while others are hurt. The easy money policy of the last decade drove a housing boom across the southern tier of the US but all it did in the northeast was raise land prices which made building new housing even more expensive which actually prevented the buildup of oversupply that is now plaguing other regions. Even so, it was not a good policy for the northeast at that time.

    It is much the same in the EU as in the US, there is no monetary policy that will benefit all regions equally. The only thing the central bankers can do is try to maintain a monetary position where sacrifices and benefits are divided in a manner that creates the best fit for economic growth across the entire area.
     
  7. The Big Buddha

    The Big Buddha New Member

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    oh believe me , there are MANY people who want the mark back! ;)
    they say, as i think too, that the euro is bad for germanys economic system wand the GDP!


    someone said here, that the euro should be 1:1 with the dolllar. is that right? i ohnly know for sure, that 1 Euro was 2 german marks! we germans had our currency cut into a half!!! that was really bad. the money lost its worth and at the same time our prices for everything went high!!!

    by the way, is my english good enough to understand? :-D
     
  8. liberalminority

    liberalminority Well-Known Member

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    many do want germany to be solo again but they are not looking in the long term because if they leave the european union or create a northern european currency with all the successful european countries and force out italy portugal greece etc.... in the longer term this currency value will drop in value to the world because the United States has proven a United currency eventually prevails in the long run and the European Union Euro is the equivalent to the United States Dollar.

    of course as of right now if the northern european countries did not bail out the eastern europeans and seperated they will have the strongest currency on earth temporarily.
     
  9. unrealist42

    unrealist42 New Member

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    The Euro was originally issued at 1:1 with the $US.

    I was living in Germany in the late 1970s when the Mark went from 4:1 to 2:1 vs the $US. This was great for the German consumers but priced their exports, which were 1/2 the manufacturing output, out of the markets. As a result imports were cheaper but hundreds of thousands became unemployed.

    This was entirely the result of US fiscal and monetary policy and was the impetus for forming the Euro. As originally envisioned the Euro was to become a currency that combined the economic might of the EU in a common currency that would be a rival to the $US so that the nations of the EU would become less subject to the whims of US fiscal and monetary policy when paying for things like oil and other commodities which were priced and traded in $US at the time.

    Despite all the gloom and doom about the Euro it has generally worked out as planned. Many nations now accept Euros instead of $US in trade with the EU and have accumulated Euros as a reserve currency in their central banks. The $US is losing its ability to effect international trade beyond its borders because of the Euro.

    if you would like to go back to the old days of European nations forced into unequal trade with the US just to gain enough $US to engage in international trade then dissolving the Euro is just the thing for you. Germany, France, Italy the Benelux nations would be forced back into the unequal trading relationship with the US that abused their economies before the Euro because not one of their currencies would be worth holding as a reserve or acceptable in international trade.

    The current "debt crises" is nothing less than an attempt to break the Euro so the financiers in the US can regain their dominance over the world economy. Without the Euro international finance would necessarily move back to the US, where all the $US are.
     
  10. DennisTate

    DennisTate Well-Known Member Past Donor

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    I think that you may want to read about an experiment that took place in
    Worgl, Austria during the Great Depression so that you know how many
    smaller scale alternatives are available to such a drastic move.



    http://www.whatcomwatch.org/php/WW_open.php?id=717
    City in Austria Printed Local Currency

     
  11. Ted

    Ted Banned

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    ideally the price of currency would be established like the price of bread or milk, by the free market. Thats way you only pay with it is really worth. Do you understand?
     
  12. DennisTate

    DennisTate Well-Known Member Past Donor

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    Or..... you might want to consider the example of Canada's P. M. MacKenzie King who
    initiated a rather brilliant monetary system back in 1940 when faced with the problem of
    financing WWII.

    His policy remained in effect until 1974...... and I and many others would argue that it
    never should have been changed!

    Here is the way that I explained it in my 2006 campaign for the office of M. L. A. as an
    independent.

    www.BankingSystemFlaws.blogspot.ca/


    A better example of an active LETS is:
     
  13. Ted

    Ted Banned

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    can you say why you feel it is superior to the free market?????
     
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  14. DennisTate

    DennisTate Well-Known Member Past Donor

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    Because it can be agreed on by the majority of people of the USA and Canada and most free
    nations that there are certain types of infrastructure projects that should be financed interest free.....
    or nearly free of interest..... by an organization like The Bank of Canada... that is theoretically owned
    by all Canadians.

    Even if a one percent interest rate was paid by the province of Nova Scotia to build a road, new hospital,
    school or new sewage treatment system for a town, as the principle and interest on the loan was paid back to
    The Bank of Canada, it is like the people of Nova Scotia would be paying the interest to all Canadians.

    Take a look at the statistics on how much interest charges President Lincoln saved American taxpayers
    through his wise Greenback Monetary Policy experiment:


    http://www.michaeljournal.org/lincolnkennedy.htm
    Melvin Sickler:

    "During the Civil War (1861-1865), President Lincoln needed money to finance the War from the North. The Bankers were going to charge him 24% to 36% interest. Lincoln was horrified and went away greatly distressed, for he was a man of principle and would not think of plunging his beloved country into a debt that the country would find impossible to pay back.

    Eventually President Lincoln was advised to get Congress to pass a law authorizing the printing of full legal tender Treasury notes to pay for the War effort. Lincoln recognized the great benefits of this issue. At one point he wrote:
    The Treasury notes were printed with green ink on the back, so the people called them “Greenbacks”.

    Lincoln printed 400 million dollars worth of Greenbacks (the exact amount being $449,338,902), money that he delegated to be created, a debt-free and interest-free money to finance the War. It served as legal tender for all debts, public and private. He printed it, paid it to the soldiers, to the U.S. Civil Service employees, and bought supplies for war."
    ................

     
  15. Ted

    Ted Banned

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    actually our subject was how exchange rates should be determined with a new currency. Did you know its important to know the subject in order to move a conversation forward?
     
  16. Zorroaster

    Zorroaster Well-Known Member

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    The Euro is the official currency of the European union. Every nation of the Eurozone that has made the euro legal tender must denominate its public debts in what functionally amounts to an external currency. (Since the UK has retained the pound, it does not fall under this limitation.) This zero-sum fiscal setup enforces a downward spiral on member nations with a negative trade balance of payments. The Eurozone is thus falling into the beggar-thy neighbor trade and economic policies, which exacerbated national member conflicts.

    Germany is in a unique position. Because of 1) its large balance of payments surplus and 2) its outsize political influence over EU economic policy, the fact that the Euro is an external currency does not onerously limit its economic policy space. There is no real reason or incentive to reintroduce the mark as legal tender.

    The basic dissonance of the Eurozone is that it has a common currency but no real federal system to implement it.
     
  17. Ted

    Ted Banned

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    why????????

    - - - Updated - - -

    do you have any idea what that means??
     
  18. akphidelt2007

    akphidelt2007 New Member Past Donor

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    The EU was created to rival the USD. It's an absolute mess because there is no uniformity unlike the US monetary system. They are trying to turn countries in to states but still treat them as countries. It's never going to work, unless they can get one bonding agent/taxing agent that controls the entire system. If any country were to leave the EU they would adopt the American monetary system, since it's the most effective in the world. Setting up a central bank, a treasury, and introduce money through a banking system. But they wouldn't necessarily start from scratch. They would exchange the euro at some rate for their national currency and just go from there. They have two choices, they could disband or work as one unified unit. I highly doubt those countries can work together though. So they're basically screwed.

    - - - Updated - - -

    You don't have a clue what he's talking about. Like usual.
     
  19. Ted

    Ted Banned

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    1) the EU and Euro were created to make trade easier which makes perfect sense
    2) it's not a mess at all. We had a housing credit bubble and so did they.
     
  20. akphidelt2007

    akphidelt2007 New Member Past Donor

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    It's a complete mess for a lot of countries within the EU. There's a reason why we were able to recover and they weren't. But to understand why, will take you a very long time.
     
  21. Ted

    Ted Banned

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    1) we were not able to recover unless you call 1-2% GDP recovery
    2) Europe has always had Eurosclerous because it is more socialist but it would be worse for them if not for the EU and Euro. Do youo understand?
     
  22. akphidelt2007

    akphidelt2007 New Member Past Donor

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    There's over 10% unemployment, countries wanting to get out of the EU, countries riddled with debt and austerity, slow economic growth. It's an absolute mess.
     
  23. Ted

    Ted Banned

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    1) its always had 10% unemployment thanks to generous libsocialilst incentives not to work
    2) no one wants to get out. England is voting this week and polls say it will stay in.
    3) USA is riddled with debt and austerity, slow growth, and absolute mess too.

    Do you understand now?
     
  24. akphidelt2007

    akphidelt2007 New Member Past Donor

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    Lol, the US is far better off right now than the EU. The EU is a mess and has been for the past 6-7 years. And England wants out because it's a mess. When one of your biggest economic producers wants out, you have a problem. There's pretty much no one, except for someone like you, claiming the EU is doing well, lol. Do you understand now?
     
  25. Ted

    Ted Banned

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    We have always been better off because we are less socialist. Did you think there was another reason.

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    As I said 3 times there is no evidence that England wants out!!!!!!!!!!Do you read the papers??????????!
     

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