tag:blogger.com,1999:blog-6297413898275266606.post5332032018868074893..comments2024-03-27T18:15:59.096+08:00Comments on Economics Malaysia: IMF Country Report On Malaysia: Reading Between The Lineshishamhhttp://www.blogger.com/profile/06265308095732759923noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6297413898275266606.post-67886659429014668092013-03-12T09:03:07.682+08:002013-03-12T09:03:07.682+08:00aetherfox, it's actually quite easy to run out...aetherfox, it's actually quite easy to run out of forex if you're not careful. The original purpose of the IMF was to manage just that - balance of payment crises.<br /><br />While its true that private companies and firms resort to the open market for their forex needs, the "open market" is essentially the domestic banking system. <br /><br />Local banks in turn source their hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-49983942454297318992013-03-12T07:49:09.173+08:002013-03-12T07:49:09.173+08:00Just asking for a clarification here - you said
...Just asking for a clarification here - you said <br /><br />"Second, under the current financial system, you can't actually "run out of money". What you can run out of is foreign exchange to pay for imports, and that obviously can't be "printed"."<br /><br />Can you actually run out of foreign exchange to pay for imports? As far as I know most imports (and aetherfoxhttps://www.blogger.com/profile/01845828832281548307noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-5471886986951701802013-03-09T00:03:43.474+08:002013-03-09T00:03:43.474+08:00Jasper,
1. For the gold dinar, it's basically...Jasper,<br /><br />1. For the gold dinar, it's basically a desire for financial system stability and transactional certainty. People have forgotten that the price for that stability is real economy instability and commodity price instability.<br /><br />2. Technically, the MYR has NEVER been fully back by foreign reserves. This is partly semantic - the Ringgit was only officially introduced hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-16908608872789564772013-03-08T22:02:04.077+08:002013-03-08T22:02:04.077+08:00Hisham
I couldn't resist asking this, since y...Hisham<br /><br />I couldn't resist asking this, since you mentioned "metallic coinage" - why are some people pushing the idea of "gold dinars"?<br /><br />And is the MYR 100 per cent backed by Malaysia's international reserves? Or is it better than 100 per cent backing?<br /><br />And are the policy makers keeping the MYR "artificially weak" so as to boost Jasper Bloodstonenoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-45101210104256145032013-03-08T16:50:22.271+08:002013-03-08T16:50:22.271+08:00Jasper, by all means.
Though I have to add money ...Jasper, by all means.<br /><br />Though I have to add money in itself has never had intrinsic value, not even when it was based on metallic coinage.hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-33613357645884995792013-03-08T13:14:20.199+08:002013-03-08T13:14:20.199+08:00Hisham
There's a strangely compelling logic i...Hisham<br /><br />There's a strangely compelling logic in what you have posted, but, unfortunately, I still don't agree.<br /><br />To take your example of of the Ringgit against the Yen or the Hong Kong Dollar, I could argue that 1 Singapore Dollar fetches JPY75.3 and HKD6.21.<br /><br />It's all relative, you see. The Singapore Dollar is still intrinsically "stronger" thanJasper Bloodstonenoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-86129824641947242532013-03-08T09:34:45.851+08:002013-03-08T09:34:45.851+08:00Jasper, by your logic, the Ringgit must be stronge...Jasper, by your logic, the Ringgit must be stronger than the Yen or Hong Kong dollar because RM1 can buy JPY30 or HKD2.5. Do you honestly think that's true?<br /><br />All you're seeing is differences in incomes and price levels, which says nothing about whether a currency is "strong" or "weak" (which are actually used to describe over or under valuation of a currency hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-1897004113387957012013-03-07T17:34:52.754+08:002013-03-07T17:34:52.754+08:00Hisham
With all due respect, that's the kind ...Hisham<br /><br />With all due respect, that's the kind of gobbledygook that gives economics (and economists) a bad name!<br /><br />I'd rather go with the views of ordinary Malaysians who work in Singapore as skilled and unskilled labour. For them, every Singapore Dollar earned fetches them 2.4+ Ringgit in Malaysia.<br /><br />So, let's go easy on the "metrics"!<br /><br />Jasper Bloodstonenoreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-2406044570610452862013-03-07T15:47:58.175+08:002013-03-07T15:47:58.175+08:00aetherfox,
The generally accepted rule of thumb i...aetherfox,<br /><br />The generally accepted rule of thumb is that any surplus or deficit within about 2%-3% of GDP is long term sustainable and consistent with a fairly valued exchange rate - this is actually the explicit assumption built into the IMF's old valuation models.<br /><br />Nevertheless, the value-added trade hypothesis doesn't actually change the underlying economic logic hishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-59467182801697526612013-03-07T12:40:09.745+08:002013-03-07T12:40:09.745+08:00Is it possible for countries to consistently run t...Is it possible for countries to consistently run trade surpluses and deficits and still be considered in long term equilibrium?<br /><br />For your hypothesis to be true, it must be possible for a currency to be "correctly valued" yet the country still run a deficit. Yet a deficit can't run forever, because you... (and I'm not very clear on this) eventually run out of money aetherfoxhttps://www.blogger.com/profile/01845828832281548307noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-22028575462107931582013-03-06T21:33:16.429+08:002013-03-06T21:33:16.429+08:00Jasper,
The units of exchange are irrelevant to v...Jasper,<br /><br />The <i>units</i> of exchange are irrelevant to <i>valuation</i>. In the purchasing power parity terms, if the RM1.00 buys the same thing as SGD0.40, then the exchange rate is indeed correctly valued. However, valuation metrics are a bit more complicated than just purchasing power:<br /><br />http://econsmalaysia.blogspot.com/2009/03/exchange-rate-policy-3-equilibrium.htmlhishamhhttps://www.blogger.com/profile/06265308095732759923noreply@blogger.comtag:blogger.com,1999:blog-6297413898275266606.post-14439132127548830042013-03-06T20:19:55.928+08:002013-03-06T20:19:55.928+08:00Hisham
Is the Ringgit "incorrectly valued&qu...Hisham<br /><br />Is the Ringgit "incorrectly valued"?<br /><br />I don't need economists to tell me this, when my friendly neighborhood money changer tells me that my Ringgit is only worth 40-something Singapore cents!<br /><br />The indignity of it all!Jasper Bloodstonenoreply@blogger.com