Posted 1 year ago on Aug. 7, 2012, 9:31 a.m. EST by niphtrique
from Sneek, FR
This content is user submitted and not an official statement
... is to have a holding fee on money. If a foreign country (for example China or India) export goods or services to the US, it receives US Dollars. Accumulating currency reserves is unattractive with a holding fee on money. Therefore the following will happen:
- The foreign country will spend the currency as soon as possible, creating employment.
- The foreign country will refrain from exporting as it cannot import something useful from the US so the value of the US Dollar will drop and make the US more competitive.
Natural Money does not only end outsourcing. It is the solution to all current economic problems. An implementable proposal:
Trade imbalances are economically inefficient and therefore Natural Money will make the economy more efficient. A holding fee on money will make international trade work based on comparative cost advantages like David Ricardo explained in his book On the Principles of Political Economy and Taxation. A relative cost advantage between countries will result in balanced trade as the currencies will not be hoarded because of the holding fee. A country that has a trade deficit will see its currency drop until exports match imports. Currently some countries run large current account deficits for a long period of time because of carry trades based on interest rate differentials and exporting nations hoarding currencies of importing nations.
Current account deficits destroy productive capital of importing nations. This is a process of reverse economic development resulting in a third world economy. Complete industries have been wiped out in the United States because the US Dollar was propped up by high interest rates and currency hoarding by exporting nations like China and Japan. This created useless capital in China and Japan. Those countries produce goods and services for US Dollars that will prove to be worth less in the future as the United States has too little productive capital to support the value of its currency. To balance the trade useless capital in China and Japan may need to be destroyed and replaced by useful capital in the United States.