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Help With State!

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Post: #1
Help With State!

My popularity has decreased drastically, so has the health and environment of my state, my economy has risen substantially however, so I was wondering, what can I do to help with my popularity, health and environment?

16.06.2013 00:10
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Benevolently Watching You

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Post: #2
RE: Help With State!

You do realize that the only reason for your economy to grow by over 300% is the Monument, don't you?
And it is also obvious that the GDR template cannot finance such a project in the beginning (in fact most GDR states will never be able to afford it at any point in time).
So, my point is, have you looked at your state's budget lately?
I'm not sure whether people really like it if somebody spends nearly all of their money even faster than they can earn it.

"If you grab them by their balls, their hearts and minds will follow." (Yes, Minister)

This post was last modified: 16.06.2013 03:17 by Titian.

16.06.2013 02:42
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Posting Freak

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Post: #3
RE: Help With State!

Well, from a theoretical perspective, it's possible to run such a massive fiscal imbalance (I.e. Deficit) without hindering the private sector much. (I.e. A large budget deficit combined with surging economic growth would translate into a huge trade deficit financed with an influx of speculative foreign capital.)

The problem there is that, since the monies are being wasted, your credit rating would, in real life, be marked down to garbage status. Interest rates would surge and your currency would be reduced to toilet paper. Plus, as soon as your Monumental Project is finished, your economy is going to go down the drain and your citizens will overthrow your regime.

P.S. I wrote that before even looking into your statistics and indicators. I was right, which goes to show that we do have a realistic economic model factored into this game. Nonetheless, two indicators are unrealistic. Your exchange rate is excessively strong when it should be worthless and the interest rate remains low when interest rates should be in the double digits. In real life, your economic policy would cause the interest rate to surge and the currency to depreciate.

Imports: 113.79 Bil. €
Exports: 7.72 Bil. €

Saving Ratio: 14.54 %

Money Supply: 311 Bil. €

Commodity Index: 1.71

Your large trade deficit is financing your budget deficit as trade deficits, by nature, have to be negated with an influx in foreign capital. Monies leaving the country have to be countered with monies entering the country. Adam Smith, Ludwig Von Mises, John Maynard Keynes and other leading macroeconomists all agreed on that matter and that's the reason the Post-War Woods System was established on the basis of balanced trade in order to reduce trade imbalances and prevent financial crises within the global economy and the global financial system itself.

Furthermore, the demand for commodities (I.e. Gold, metal and such) has translated into commodity speculation. This, in turn, has undermined your manufacturing sector and left you in a position where exporters cannot sell their goods. (I.e. The reason your exports are lower than the average for other nations like your's)

The savings ratio is above average in your nation because higher prices (I.e. Your High Inflation) and too much money chasing too few goods have created an incentive for people to save instead of spend. That higher savings rate has, in turn, assisted you in financing the budget deficit. Also, since your resources are being dedicated to your Monument, there are fewer resources and goods available to consumers for purchasing. That's similar to WWII America when people saved so much because there were few spending options available to them. (I.e. The WWII Rations System which left far fewer goods for consumers to purchase) I would wager that, in real life, your store shelves would go understocked.

The final way you're able to finance your unsustainable spending and deficit has to do with your Money Supply. Your money supply is much higher than the average state. You're, in effect, printing money to finance budget spending. You're creating money from thin air to build your Monumental Project. The printing press can, at times, support and sustain economic growth if it's conducted in a moderate manner. Your nation, on the other hand, is printing at a rate which far exceeds a "moderate" approach. That's another reason commodities are so high priced in your nation. Investors are speculating on commodities and driving those prices through the ceiling. That has, in turn, left you with an uncompetitive manufacturing sector that is unable to sell to foreign countries. It's also the same reason your housing and land prices have gone through the stratosphere. You now have a housing and land bubble waiting to be popped once the Monument Construction has ended. Printing too much money from thin air does, in most cases, lead to financial bubbles because inflation and strong short-term economic growth often will lead to insane short-term speculation. Money Supply increases have, historically, translated into capital inflation much sooner than consumer price inflation. You have a housing and land bubble, a commodities bubble and even a stock market and equities bubble. All of this will crash once your project is finished and governmental spending crashes back to normal. In real life, such a state of affairs would lead to a financial collapse and depression.

A wonderful illustration of this involves oil. The Federal Reserve axed interest rates and began printing like crazy after the NASDAQ Internet Stock Bubble of 1998, 1999 and 2000 caught fire. Bush increased federal spending and signed trillions in tax cuts into law and then took us into Iraq and Afghanistan. All of that money, too much money chasing too few goods, combined with negative real interest rates on traditional savings and bonds, came to offer an incentive for people to speculate on commodities. Many even borrowed money to speculate on the price of crude oil. Oil rose from around $20 a barrel in 1998 to well over $100 a barrel by 2007 even though the underlying supply-and-demand fundamentals did not change. There was never a shortage of oil or gasoline.

I.e. Your nation reminds me of African Countries, Brazil and Mexico in that, during the 1960s and 1970s, those nations drove down the road of free spending and rapid currency creation. Those countries did experience high economic growth rates for a short period of time. However, it wasn't long before their economies collapsed as their currencies became worthless, hyperinflation settled in, financial wealth vaporized, interest rates soared to double digit levels and the few banks that survived refused to extend new loans and mortgages to consumers, businesses, investors and even the state.

Your state is beyond being redeemed and you will soon surrender control. Revolution or assassination anybody?

This post was last modified: 16.06.2013 05:22 by RichardAWilson.

16.06.2013 03:59
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Post: #4
RE: Help With State!

It's likely all about the project start - the state can't handle an attempt of this size.

16.06.2013 12:26
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