Brexit reports reveal ridiculousness of "the system."

A fascinating issue sprung up with the media's reports of the Brexit. Notice how stringently all of the negative reports have focused on the value of the British Pound.
money.cnn.com...

Economists had been warning for months that if the U.K. referendum resulted in a vote for a British exit (Brexit) from the EU, that would do lasting damage to the British economy.

www.bbc.com...

The pound's dramatic fall started overnight as the outcome of the referendum became clear. At one stage, it hit $1.3236, a fall of more than 10%.

time.com...

British voters blindly jumped headfirst into the unknown Thursday by taking the unprecedented and historic step to break from the European Union. Now the British pound is paying the price.

Sounds bad, doesn't it? Seems like a strong Pound, one with a higher value to the various market currencies would be a Godsend, right?

But there's this:
www.investopedia.com...

The strong U.S. dollar has been bad news for most investors. This is unfortunate because the appreciating dollar has been easy to detect for well over a year.

www.businessinsider.com.au...

All other things equal, when a currency rises against its trading partners or competitors, the sectors of the economy exposed to that rise lose competitiveness, partly as its exports become more expensive. When a currency falls relative to trading partners and competitors local businesses who either export or compete with imports become more competitive.

www.forexnews.com...

For the most part, governments want to have a weak currency to help encourage their exports. The weaker a currency is, the more attractive that countries’ goods and services appear to others.

Don't be tricked, Brits... your vote yesterday can ultimately lead to a very powerful growth inside the UK manufacturing and export sectors. You just made the British economy move into a position to grow like wildfire once the initial pangs of panic have subsided. The truth of the matter is this, strong currency, weak currency, it's all a big ass game and what's good for you may not be good for the rest of the world, but you can be certain the brush it gets painted with will likely be selected based on what the overall West wants rather than what's best for the individual nations and their citizens.

From an earlier link:

But the value of the pound is important, and here’s why. A stronger dollar against major currencies like the pound and euro makes U.S. exports less competitive, thereby limiting gross domestic product, and payroll, growth. Over the longer term, the U.S. now will have a harder time pushing for its interests in Europe, from trade deals to containing Russia. What’s more, savers who had hoped the Federal Reserve would raise short-term interest rates anytime soon should be disappointed.

Your vote is being portrayed as a bad thing, as having left the world "reeling," and as being self-destructive to the UK not based on any truths of your own situation, but rather because your Brexit tweaked the nose of the western globalists. Ironically, the slipping of currency values in Europe and Asia is a good thing for the average American citizen, too. The stronger the dollar, the cheaper the imports. If your new leaders play this correctly, the UK can and will witness the same type of economic and middle class growth as the US did coming out of WWII, when the dollar wasn't as strong and the USA was primarily an exporting nation.

So in the US we WANT negative interest rates?

Makes sense. More buying power for other currencies means a more competitive labor market as well.

a reply to: burdman30ott6

This would be all well and fine if the UK was similar to China and exported a ton of goods, but they don't, do they?

Those that sell a lot on the world market want to keep currency low. But that won't help them to buy foreign commodities. It will hurt.

Have a look at the current UK trade deficit. www.tradingeconomics.com...

Until they are in surplus position, your argument is pointless.

Can't the bankers stop buying their debt?

How does the IMF okay into this

originally posted by: onequestion
So in the US we WANT negative interest rates?

Makes sense. More buying power for other currencies means a more competitive labor market as well.

The problem is and always has been that it is impossible to have a prosperous economy in absence of strong national protection laws, import tariffs, strong minimum wage requirements, and all the various self-restrictive regulations the US operates with. These issues create a massive disconnect between what's best for the People (low inflation) and what's best for investors and multinationals (robust inflation.) This is because investors own stock, not set dollar values, and multinationals own assets, not set dollar values. If I buy an acre of land for $100 and 10 years later inflation has run rampant and that land will now sell for $1,000, my investment has yielded dividends. With workers, however, if I earn $100 and stash it away, in the same 10 years it is still worth only $100, but it's buying power has lost 90% of it's value.

The ONLY wise route economically is to shun globalism, reinstate import tariffs, and rebuild the value of your currency. The UK has been handed a gift here because they have more options with a weak Pound to attract investors... but if they're smart, as soon as they get those investors on board, they'll start building their manufacturing sector to the moon and pass tariffs, strong tariffs that make buying a Japanese car or America airplane financially disadvantageous for Brits, but make exporting British made cars and planes financially brilliant to all parties involved, especially the UK workers.

originally posted by: nightbringr
a reply to: burdman30ott6

This would be all well and fine if the UK was similar to China and exported a ton of goods, but they don't, do they?

Those that sell a lot on the world market want to keep currency low. But that won't help them to buy foreign commodities. It will hurt.

Have a look at the current UK trade deficit. www.tradingeconomics.com...

Until they are in surplus position, your argument is pointless.

There's no faster way to get into a surplus than by becoming the more attractive option. That trade gap was growing before the Brexit even became a thing...

Look, I'm not suggesting this will be painless for the British People, but if the UK leaders play things correctly, what comes out of it will be worth the pain and then some.

originally posted by: burdman30ott6

originally posted by: nightbringr
a reply to: burdman30ott6

This would be all well and fine if the UK was similar to China and exported a ton of goods, but they don't, do they?

Those that sell a lot on the world market want to keep currency low. But that won't help them to buy foreign commodities. It will hurt.

Have a look at the current UK trade deficit. www.tradingeconomics.com...

Until they are in surplus position, your argument is pointless.

There's no faster way to get into a surplus than by becoming the more attractive option. That trade gap was growing before the Brexit even became a thing...

Look, I'm not suggesting this will be painless for the British People, but if the UK leaders play things correctly, what comes out of it will be worth the pain and then some.

I'm not seeing how hurting your buying position on the world market as helping you grow your economy and eventually grow your manufacturing sector.

The correct way to do it of course would be to keep your dollar high, buy what you need to supply your manufacturing sector, revitalize it, and then move towards lowering your dollar once needed commodities are in place to begin manufacturing.

I'm still not seeing manufacturing as being the 'way of the future' though unless we are talking high tech commodities.

Furthermore, in order for Britain to be a successful manufacturing, net surplus world trade seller, they would need to buy or obtain commodities needed for manufacturing cheaply on the world market, or produced cheaply from local sources.

However, as your pound lowers in value, you lose buying power on the world market. Now, I could be wrong, but I don't believe the UK is large enough now in the post-colonial days to easily and cheaply provide itself with the needed commodities to manufacture cheaply.

Therefore, we move back into the conundrum of 'having to buy cheap on the world market in order to aquire commodities for cheap manufacturing'. I don't see how a country so small, without its old colonial assets that used to provide endless commodities being able to sustain itself as a manufacturing powerhouse.

Mark Carney doubles down on claim that Brexit has shrunk UK economy – UK politics live www.theguardian.com...

"Mark Carney defends claim UK economy has shrunk from 90% size of Germany's to 70% since Brexit
Good morning. Last month, in an interview with the Financial Times, Mark Carney, the former governor of the Bank of England, added to the considerable evidence about the harm done by Brexit to the UK economy with a striking statistic. He told the FT:

In 2016 the British economy was 90% the size of Germany’s. Now it is less than 70%.

This figure was widely quoted on social media, but it was also strongly contested, even by economists who accept that Brexit has held back the UK economy. One of the most prominent critics was Jonathan Portes, a former government economist who is now a professor of economics and public policy at King’s College London, who described it as a “zombie statistic” and “nonsense”. He said Carney was measuring the size of the two economies according to the prevailing exchange rates. But he said the normal method for comparing economies was to use “purchasing power parity”. (Put crudely, this is a measure that tries to evaluate how rich Britain is not by looking at how much stuff we could buy if we took our pounds and went to the US or China, but by how much stuff we could buy if we spent it in the UK.) Portes told the Daily Mail last month:

The pound has risen by almost 10% against the dollar since the Truss nadir. Has the UK economy really grown by almost 10% relative to the US in a few weeks?

Similarly, Carney is choosing a date when the pound was abnormally high against the euro (January 2016), another one when the pound was much lower, and then saying we’ve underperformed Germany by 20%.

That’s just obvious complete nonsense. If you look at actual annual growth rate in domestic currency, the UK and Germany have grown by quite similar amounts since 2016.

But this morning, in an interview on the Today programme, Carney defended his use of the 70% figure. He said the value of the pound started to fall when the referendum was called, it went down sharply when the result was announced and “it hasn’t recovered”.

Carney accepted that there was a difference between the purchasing power parity exchange rate and the market exchange rate. The market exchange rate was what ultimately mattered, he said, because it affected the UK’s ability to buy goods from abroad. He went on:

It’s relatively rare that you get big differences between the two [exchange rates]. But you get them when you have a long-standing shock to productivity in the economy and that is unfortunately what we’re getting in the UK. It was predicted that we would get that. It is coming to pass. And … it is one of the issues the Bank of England is facing.

This is what we said [before Brexit] was going to happen, which is that the exchange rate would go down, it would stay down, that would add to inflationary pressure, the economy’s capacity would go down for a period of time because of Brexit, that would add to inflationary pressure, and we would have a situation – which is the situation we have today – where the Bank of England has to raise interest rates despite the fact that the economy is going into recession.

Carney said that he and Portes had a “difference of opinion” on this. But, Carney said, in his view what mattered was “the purchasing ability, the international weight of the economy”. And that has shrunk, he argued.

Another way to put it is that that structural shift is in part what the government, and all of us, are dealing with in the UK. We’ve had a big hit to our productivity, our capacity in the economy … and we have to take some tough decisions in order to get it back up. And that’s one of the consequences of a decision taken a few years ago."

a reply to: burdman30ott6

Brexit reports reveal ridiculousness of "the system."

The man that gave us Brexit ticks the ridiculous box in spades.

a reply to: andy06shake

he certainly failed his chance to do well by the country, I'm not surprised we are here as post 2019 election he suggested the next election would be fought on Brexit, but that would only happen if he failed to deliver, but in reality he failed because brexit is the only string he has to play

our real problem was that labour, the liberals and the conservatives have all failed to even try to fix the issues brought up by the crash of 2008/9 the too big to fail and the too small to succeed orthodoxy we now have that aligned with attempts to keep wages supressed by cheap money, energy food and products has been sunk by the covid lockdowns.

it'll all move on from not just Johnson and Brexit as things of the past but also move on from the EU, and dare I say it but also move on the West as the failure to move on from the failed orthodoxy of the 90s has been as universal and will be the cause of western downfall..

a reply to: nickyw

Politics in the UK is broken nickyw no matter which side of the aisle we care to choose.

And my guess is that's by design, at least to a certain degree.