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Backing My State's Currency

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beste
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Post: #1
Backing My State's Currency

I am experience large budget surpluses (finally) and am wondering what to do with it all.

I was thinking of saving up $11 trillion to "back" my MS of $11 trillion but will this have an effect in Ars-Regendi? I think it would since for every $ in circulation, there is a $ in the Gov piggy bank "backing" it up. What do you users/admins think?

ps. what does PE Others do? It's very vague and could mean anything but i'm afraid of increasing or decreasing it.


"I do not wish to think, or speak, or write, with moderation. . . . I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD." - William Lloyd Garrison, Abolitionist
27.07.2010 15:46
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Jakerp
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Post: #2
RE: Backing My State's Currency

beste Wrote:
ps. what does PE Others do? It's very vague and could mean anything but i'm afraid of increasing or decreasing it.


Its public spending for investments for roads, railnetworks, ports and airports and also maintenance of logistical infrastructure.

Its budget of ministry of transportation.

27.07.2010 16:06
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Helsworth
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Post: #3
RE: Backing My State's Currency

You have to put that surplus somewhere, otherwise your citizens will get upset. Invest in administration, others, healthcare and education to maximize all the social aspects.


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This post was last modified: 27.07.2010 22:19 by Helsworth.

27.07.2010 22:19
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fliboflasm
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Post: #4
RE: Backing My State's Currency

Quote:
You have to put that surplus somewhere, otherwise your citizens will get upset. Invest in administration, others, healthcare and education to maximize all the social aspects.


I think that a large surplus is a great way to go and I have run mine as high as 30 trillion and had no ill effects in popularity at all. If you get yours high enough you could get a massive revenue stream from even the lowest possible interest rate of 1%- and those low interest rates could boost your economy.
You could do as Hellsworth said and I think think that those are all wise investments in your nation. Depending on the size of your economy and your surplus you could even consider rushing your projects.

My only unanswered questions are:

  1. Is there a bug in the calculations that misreads a surplus as a deficit when it comes to currency valuations?
  2. Perhaps the administrators could modestly lessen the unhappiness factor for a surplus and perhaps raise it for large sustained deficits/debt since in one the public could benefit from the interest payments but in the other they would be stuck paying on the debt.

28.07.2010 08:09
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Helsworth
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Post: #5
RE: Backing My State's Currency

fliboflasm Wrote:

[*]Perhaps the administrators could modestly lessen the unhappiness factor for a surplus and perhaps raise it for large sustained deficits/debt since in one the public could benefit from the interest payments but in the other they would be stuck paying on the debt.
[/list]

Maybe happines would be better affected by the interest rate of a large surplus. If it's too high the people would get frustrated, because the government acts like a money grabber, while having a low interest rate, gives confidence to the citizenry and relaxes banking.


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28.07.2010 09:54
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beste
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Post: #6
RE: Backing My State's Currency

within the past week, i've moved my GDP per captia from 36K to 46K.

some stats:

capital tax: .51%
acq. tax: 4.63%
excise tax: 48.51%
customs: .58%

interest rate: 2.61%
MS: 13.2 trillion

Payment of Interest: 134 Billoin
National Surplus: 4.7 Trillion

Gov/State Income: 4.7Trillion
Gov/State Expenditure: 4.6 Trillion


"I do not wish to think, or speak, or write, with moderation. . . . I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD." - William Lloyd Garrison, Abolitionist
28.07.2010 15:41
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Jakerp
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Post: #7
RE: Backing My State's Currency

fliboflasm Wrote:
My only unanswered questions are:
[list=1]
[*]Is there a bug in the calculations that misreads a surplus as a deficit when it comes to currency valuations?


No because value of currency should drop as result of big surplus. What is surplus? It meanst that state raise a lot more money from citizens as taxes than it use on markets this means that state has massive money reserves which they put in bank account and now bank have massive amount of money which they put in dept markets this lowers interest rates next to nothing as nobody needs that much of loans. This make foreign investors disappointed because of very low interest rates of country and it eject all money away from your country witch lead to de-value of currency.

If massive surplus and low interest rates would give strong currency then there would be a bug. In real life it would crash value of currency in long run.

28.07.2010 23:59
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fliboflasm
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Post: #8
RE: Backing My State's Currency

Quote:
within the past week, i've moved my GDP per captia from 36K to 46K.


Wtg! Your citizens will love their newfound purchasing power!



Quote:
My only unanswered questions are:
[list=1]
[*]Is there a bug in the calculations that misreads a surplus as a deficit when it comes to currency valuations?


No because value of currency should drop as result of big surplus. What is surplus? It meanst that state raise a lot more money from citizens as taxes than it use on markets this means that state has massive money reserves which they put in bank account and now bank have massive amount of money which they put in dept markets this lowers interest rates next to nothing as nobody needs that much of loans. This make foreign investors disappointed because of very low interest rates of country and it eject all money away from your country witch lead to de-value of currency.

If massive surplus and low interest rates would give strong currency then there would be a bug. In real life it would crash value of currency in long run.


[color=#008000]I understand that but I would argue that it is only barely true. Investors would not like the low interest rates on fixed investments such as bank accounts but foreign investments rarely go there anyways. Foreign investments would love going to places that soar when interest rates are low such as stocks, bonds and real estate. Few investors would be willing to go abroad and risk currency swings for a puny savings account or CD.

29.07.2010 03:04
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Helsworth
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Post: #9
RE: Backing My State's Currency

Jakerp Wrote:
This make foreign investors disappointed because of very low interest rates of country and it eject all money away from your country witch lead to de-value of currency.

That's not true! Look at some countries for example, like Japan, Hong Kong, Taiwan, Czech Republic, Sweden, Switzerland, which have interest rates somewhere between almost 0 and 1,25%. Also their currencies are strong. They are very attractive to foreign investors, because they are rich. Their respective national banks have high reserves, and make lending the money to banks very cheap. So it's a very sweet deal for the banks to obtain low interest money for legitimate lending and other more ilegit practices, unfortunately, in today's savage parasitic international bankster system. But the thing is this, you have a surplus and a low interest rate, then it's time to invest. You build up a surplus with a higher interest rate and in the mean time it's time to save.


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This post was last modified: 29.07.2010 21:07 by Helsworth.

29.07.2010 21:04
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thinedge
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Post: #10
RE: Backing My State's Currency

I am no economist but how's this logic -

1. currency exchange rate, and interest rates are both indicators of the price of money (local currency).

2. price of anything goes down as supply goes up - so main factors in exchange rate will be (a) demand for the currency and (b) money supply

3. Demand for currency will increase with investment opportunities (not just investment in bonds etc, but more investment in business and assets)

4. lower interest rates locally, lower price thus increase demand for money. They will encourage more local borrowing, and reduce local deposits, but not all the money will flow offshore for investment in other currency - there will be local investment in business/assets. Lower interest rates reduce cost of home ownership thus increase housing demand etc.

5. government surplus is also booster of local confidence in economy with expectation that taxes may decrease, or at least not rise

6. increased demand and borrowings may put pressure on prices though. Continuous rise in GDP, puts pressure on to increase supply of money, thus prices go up (i think).

Thus combination of lower interest rates, and government surplus, should be ideal climate for economic growth - provided that inflation is controlled.

30.07.2010 05:31
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