"Quantitative peopling" and the AUD

mmm....shiney! · Oct 9, 2023

The AUD is set to fall to USD0.40 according to David Llewellyn-Smith.

After the 2002 Chinese accession to the WTO, AUD closely mirrored the ups and downs of China’s catch-up growth.

Chinese growth was driven by taking factories from developed countries. However, its investment in modern infrastructure relied heavily on Australian commodities. As a result, the Australian dollar rose dramatically against other developed markets.

This led to the crazy AUD peak at $1.11 in 2012. A point of extreme hubris known colloquially as the “Australian moment”. A “moment” was right.

Since 2012, the underlying trends of China’s rise began to reverse. Its competitiveness waned and DMs began to rebuild lost industries:

This, in turn, increased growth and, eventually, other DM currency values through increasing productivity and labour share of revenue.

On the other hand, Australia prioritised population growth through immigration over restoring its production base.

This put pressure on per capita national income and salaries. It reduced to a crawl growth in per capita output because of capital shallowing. Australian machines, infrastructure and other hard capital were spread among an ever-expanding population producing less with more.
Click to expand...

https://www.macrobusiness.com.au/2023/10/why-the-australian-dollar-is-going-to-40-cents

Purchase assets denominated in USD.

bubblebobble2 · Oct 9, 2023

^^^
reverse psychology…more likely USD is heading that way with their spending.

Shaddam IV · Oct 9, 2023

If it falls that low fuel costs will be eye watering and price inflation will be off like a greyhound. Whoever is the government of the day will find themselves in a living hell.

Oddjob · Oct 9, 2023

On the bright side folks......

If the Au price hold up at circa USD1850 odd oz and the AUD tanked to 0.40/USD, then the AUD Au oz price will be circa AUD4.6k.....I'll start selling some of the stack.

pmbug · Oct 9, 2023

That might be the first article I ever saw that posited that population growth was bad for an economy/tax revenue/currency. It prompted me to do a little bit of reading. For those interested:

The relationship between population growth and growth of economic output has been studied extensively (Heady & Hodge, 2009). Many analysts believe that economic growth in high-income countries is likely to be relatively slow in coming years in part because population growth in these countries is predicted to slow considerably (Baker, Delong, & Krugman, 2005). Others argue that population growth has been and will continue to be problematic as more people inevitably use more of the finite resources available on earth, thereby reducing long-term potential growth (Linden, 2017). Population growth affects many phenomena such as the age structure of a country’s population, international migration, economic inequality, and the size of a country’s work force. These factors both affect and are affected by overall economic growth. The purpose of this article is to use long-term historical data and a review of both theoretical and empirical work on the relationship among growth of population, total output and per capita output to assess the implications of their evolution for economic inequality, international migration policies, and general economic growth.
...
Click to expand...

More:

https://journals.sagepub.com/doi/full/10.1177/2158244017736094

mmm....shiney! · Oct 9, 2023

pmbug said: ↑

That might be the first article I ever saw that posited that population growth was bad for an economy/tax revenue/currency.
Click to expand...

Just guessing but population growth as a result of deliberately increasing immigration without a commensurate increase in investment into the real economy by the government/private sector puts greater constraints on the resources of a nation.

leo25 · Oct 10, 2023

mmm....shiney! said: ↑

Just guessing but population growth as a result of deliberately increasing immigration without a commensurate increase in investment into the real economy by the government/private sector puts greater constraints on the resources of a nation.
Click to expand...

This is the key point that governments have forgotten today. If population growth alone lead to better economic development, then India would be leading the world instead of being a dump.

pmbug · Oct 10, 2023

leo25 said: ↑

... If population growth alone lead to better economic development, then India would be leading the world instead of being a dump.
Click to expand...

Didn't China used to essentially be in the same boat? If India ever reaches their own inflection point, they could become a significant force on the world stage.

leo25 · Oct 12, 2023

pmbug said: ↑

Didn't China used to essentially be in the same boat? If India ever reaches their own inflection point, they could become a significant force on the world stage.
Click to expand...

Yes and no.
From what i understand about Indian people, they don't like being told what to do (they hate rules). This runs very deep in their psyche and will be very hard to overcome. Therefore no strong economy can ever form there, unlike in China.

pmbug · Oct 12, 2023

With respect to China's economic rise:

China’s strong economic growth following its shift from state‐led development (central planning) to marketization in 1978, and its drive to join the World Trade Organization (WTO), are testaments to the idea that widening the range of choices open to people—via internal and external trade—is a winning strategy. This blog post draws on my essay, “China’s Post‐1978 Economic Development and Entry into the Global Trading System,” which is part of Cato’s Defending Globalization series.
...
Conclusion

China became an economic powerhouse by opening its markets, recognizing the nonstate sector, and allowing individuals to lift themselves out of poverty. Attempts at industrial policy, under the State‐Owned Assets Supervision and Administration Commission, failed (Lardy 2018: 335–36). The lesson for China is to continue on the path of marketization and liberalization, not to revert to destructive state control and repression.
...
Click to expand...

https://www.cato.org/blog/benefits-...opening-outside-world-should-not-be-forgotten

Structurally (politically, economically), India today is, AFAIK, different from yesterday's China. I wonder what it would take for India to turn the corner. Infrastructure investment? Cultural (caste system, etc.) change? I don't know the answer.

Log in or Sign up

"Quantitative peopling" and the AUD

mmm....shiney! Administrator Staff Member Silver Stacker

bubblebobble2 Well-Known Member Silver Stacker

Shaddam IV Well-Known Member Silver Stacker

Oddjob Well-Known Member Silver Stacker

pmbug Active Member

mmm....shiney! Administrator Staff Member Silver Stacker

leo25 Well-Known Member Silver Stacker

pmbug Active Member

leo25 Well-Known Member Silver Stacker

pmbug Active Member

Share This Page

Log in or Sign up

"Quantitative peopling" and the AUD

mmm....shiney! Administrator Staff Member Silver Stacker

bubblebobble2 Well-Known Member Silver Stacker

Shaddam IV Well-Known Member Silver Stacker

Oddjob Well-Known Member Silver Stacker

pmbug Active Member

mmm....shiney! Administrator Staff Member Silver Stacker

leo25 Well-Known Member Silver Stacker

pmbug Active Member

leo25 Well-Known Member Silver Stacker

pmbug Active Member

Share This Page

Useful Searches