Real exchange rate and Dutch Disease

[benhur]

People often point to the resource curse, which keeps resource-rich countries down. Dutch disease has to do with RER. Though I understand vaguely, can someone give examples to illustrate this? I fail to see how excess can lead to decline in manufacturing, shouldn't it be the opposite? Specifically, I'd like to know how revenue from exports increase exchange rate, and how this leads to decline.:confused:

[Q]

really have no clue what you're on about? :confused:

[benhur]

It's about resource curse principle, which says countries with lots of natural resources may suffer as a result of an increase in exchange value. Does this mean there won't be enough money (in local currency) to invest in domestic industries, retail, services etc.? OTOH, if the currency is devalued, there will be inflation, prices go up, and the same problem occurs.

Is this how it is, or is there something more?

[Q]

It's about resource curse principle, which says countries with lots of natural resources may suffer as a result of an increase in exchange value. Does this mean there won't be enough money (in local currency) to invest in domestic industries, retail, services etc.? OTOH, if the currency is devalued, there will be inflation, prices go up, and the same problem occurs.

Is this how it is, or is there something more?

I see now. Well, within the framework of capitalism I guess that's how things are, unless the extra money is invested abroad (which is often done) to devaluate the currency which in turn feeds imperialist tendencies.

The solution is a global socialist and democratic planned economy which benefits for all to surpass the boundaries of the nationstate.

[benhur]

I see now. Well, within the framework of capitalism I guess that's how things are, unless the extra money is invested abroad (which is often done) to devaluate the currency which in turn feeds imperialist tendencies.

The solution is a global socialist and democratic planned economy which benefits for all to surpass the boundaries of the nationstate.

Thanks. So from this, do I understand that monetary system is the problem, and there are solutions within it? If so, will labor be the medium of exchange instead of paper money? That is, will products be exchanged based on the labor it requires to produce them?

[Student of truth]

what you just said, sounds like the New World Order.

[Student of truth]

The solution is a global socialist and democratic planned economy which benefits for all to surpass the boundaries of the nationstate

What you just said sounds like a New World Order

[GPDP]

what you just said, sounds like the New World Order.

Don't tell me you believe there is an NWO organization...

[Student of truth]

What do you think the ultimate drive and goal of captialism and facism have sought to accomplish all through the years.

1.Alexander The Great 2. Rome (all the ceasers) 3. Hitler

What did you think these things were? "a democratic world order" no, a "new world order." It always seems "new" because there is always some the some new clown who wants to have authority over the world.

[Q]

What do you think the ultimate drive and goal of captialism and facism have sought to accomplish all through the years.

1.Alexander The Great 2. Rome (all the ceasers) 3. Hitler

What did you think these things were? "a democratic world order" no, a "new world order." It always seems "new" because there is always some the some new clown who wants to have authority over the world.

I always like these conspiracy theories, very entertaining bedtime stories. Sadly they're not at all in touch with reality nor offer any alternatives.

[Q]

Thanks. So from this, do I understand that monetary system is the problem, and there are solutions within it? If so, will labor be the medium of exchange instead of paper money? That is, will products be exchanged based on the labor it requires to produce them?

You've hit the nail on the head. Any surplus will directly flow back to society, so money is not a real concern within socialism.