View Full Version : Economy .. currency's strength a reflection of the strength of the economy

11-10-2016, 05:27 AM
Economy .. currency's strength a reflection of the strength of the economy

Opening - Adel Abdul Mahdi 11/09/2016 The basis of the currency historically as a commodity (gold, silver, etc.), and later evolved to be negotiable documents (currency) leafy Bank Notes and keeping metal (reserve) to convert paper to him currency on demand .. With the increase in transactions was abandoned in the "Bretton Woods" agreements in 1944 for gold base (except the dollar until 1971), to be, in essence, the issue of currency as the economic needs of the country and dealing capabilities economic. There are two systems Nkadian two basic .. Anything else a combination of both. 1. The value of the currency is gaining force of law .. and decides to price the state undertakes to cover it .. 2- or leave the currency market to decide the price. Follow us until 2003 and the first system .. and follow -After Altgier- second system. And that the current problem of monetary policy, including the currency auction and dealing with banks and foreign transfers and the depletion of foreign currency, is the mixing of the two concepts. Since the mixing prevents enjoy the benefits of any of the two systems, thus we turned into victims only Vodathma and Myatema.
Summed up the first advantages of the system stability of the exchange rate and moderating inflation when the economy can fulfill its obligations .. The disadvantages least expensive market require us to charge. And whenever the exchange rate was arbitrary, emphasis was placed on the foreign exchange and conditions of the acquisition of "hard currency", the greater the gap between the official price and the market price (the black market!). The official price in the first system we have about 0.33 dinars to the dollar, the market price is about 4 dinars in 1988, the collapse of the mid-nineties up to 3000 dinars to the dollar (about 10,000-fold). Rising inflation rates astronomically, lose transactions and market stability, and increase the smuggling of currency, settling accounts and the value of foreign currency, even to define marriage dowry. The second is that the advantages of the system of supply and demand will determine the exchange rate, or a floating exchange rate between the time of the last price is in line with the needs of the market. And advantages of the system measures match with reality, and thus the stability of prices and the ability to control the inflation and stem foreign exchange and currency needs confidence .. The disadvantages are the increase in acts of speculation, and increase the chances of draining hard currency, and difficult to control.
The problem today is the contradiction between the philosophy adopted constitutionally and legally, the mechanics of the market, and many of the applications and practices that are still dealing concept of socialist state or a fixed exchange rate. The problem is not the currency auction, and the system of credits and foreign transfers, and banks, in spite of all the gaps and cons .. but the weakness of the near absence of the national economy and projects, master real sectors, and weak financial markets, stock exchanges and institutions, adopting almost entirely on the balance of trade (exports and imports), and the chaos of a big the customs and tax system, and the prevalence of treated paper currency and the weakness of the banking habit, etc.Four years ago, brought down the leadership of the central bank, and the more conservative efficient Dr. Shabibi, and arrested a number of its officials, after reports indicate that imports across much lower border crossing points, which is sold in the currency auction. He freed the bank's staff, including Deputy Governor Dr Saleh appearance, and later appointed -basthakaq Kavaeh- and economic adviser to the prime minister. It became clear that the responsibility of bleeding currency does not fall on the central bank or banks and currency auction, but the weak economy and its institutions, relying on the trade balance. Vlaigav bleeding must stop imports .. Without production, the economy and the real national can not stop imports. But imports are used in the central bank's rule, or as a red line, so that the bank reserves do not fall for imports of at least 6 months. It is a fait accompli base, reveal the failure of our economy and subservience. While sound in sound economies, the rule is linked precautions business and economic activity mainly size. This contradiction and imbalance does not address the instructions confused and threats, and the mixing of concepts that deepen corruption .. but corrects the tracks and build the foundations of macroeconomic Macroeconomies and partial Microeconomies, which would rely on the diverse national production and reduce dependence on oil exports and imports. And that the imports that have not been funded legal and transparent and streamlined ways, will fund the "other ways", and that their instruments of forgery, smuggling, fraud and bribes, and the increase in costs, paid in the end, the economy and the citizen.