The dollar is the source of Problem

[niaz]

Certainly Implementing the State to State Barter Trade is Logical
Based on weight of goods being exchanged or Quntity which are measurable figures

Example :
Tones of Eatable vegetables vs Barrels of Fuel
Tones of Flour vs Barrels of Fuels
Tones of Sugar vs Barrels of Fuel
Tone of Wheat vs Tones of Coal
Tones of Marbel vs Wood Products (Raw wood for construction)

• And State controls the Distribution of the Goods Nationally , with Local Auctions or Sale at Port Cities like Gawadar / Karachi , the goods are later transported across the country

The goods we have

a) Fish
b) Wheat
c) Fruit
d) Flour
e) Sugar
f) Rice

Are more valueable then what we are really told
If you have food etc you can still live a happy life

But if you had a bag full of currency that is paper based and no one is willing to sell you anything for it you will starve becasue there is no food

In order to determine the value of the goods in Barter, you would still use New York Mercantile Exchange or some other International foum where the values are quoted in dollars. I have personally sold Mexican crude in the 1980’s to Cuba in exchange for their Sugar; the yard stick used was monthly average of the WTI & Sugar price quotes at the Nymex. Thus you can't get away from the Dollar. If you don't believe me, ask any Trading Company dealing with Iran or Cuba.

Besides, in such a scenario, Pakistan State officials responsible for the barter trade would have a field day. It reminds me of a comedy program on PTV long time ago called 'fifty fifty' where, given the choice; would be bride selected a ‘Peon’ at the Customs over a highly qualified engineer.

 

[Nilgiri]

Certainly Implementing the State to State Barter Trade is Logical
Based on weight of goods being exchanged or Quntity which are measurable figures

Example :
Tones of Eatable vegetables vs Barrels of Fuel
Tones of Flour vs Barrels of Fuels
Tones of Sugar vs Barrels of Fuel
Tone of Wheat vs Tones of Coal
Tones of Marbel vs Wood Products (Raw wood for construction)

• And State controls the Distribution of the Goods Nationally , with Local Auctions or Sale at Port Cities like Gawadar / Karachi , the goods are later transported across the country

The goods we have

a) Fish
b) Wheat
c) Fruit
d) Flour
e) Sugar
f) Rice

Are more valueable then what we are really told
If you have food etc you can still live a happy life

But if you had a bag full of currency that is paper based and no one is willing to sell you anything for it you will starve becasue there is no food

How much do you propose is eroded in what Pakistan can get by using the USD (or any forex you have) instead of direct bartering?

You have cherry picked a few things about Fiat currency but the context has been distorted grossly. You do realise the underlying wealth level of the US and west (which is in lock step with the US largely, as much as many want to convince you otherwise) that provides a huge seigniorage buffer? Trust me, the millions/billions of people in the free market vote with their daily transactions magnitudes more than the unadulterated conspiracies....which lends massive depth and inertia to the seigniorage well.

There is a long term problem with fiat currency (Esp bank printed rather than govt printed) but that bears little to no effect on trade patterns (which are driven by demand/supply and comparative advantages). Pakistan as developing country with a pretty undervalued currency should be doing much better than it is. You need to read @niaz post and stop passing the buck to foreign bogeyman and look to address the clear structural problems within.

Deng Xiaopeng could have done the same thing as Mao (along the lines of the big western conspiracy you talk of), but he didn't did he?....and how many millions of chinese are better off for it (and now have their own internal vastly improved economic resilience)?

 

[VCheng]

Pakistan as developing country with a pretty undervalued currency should be doing much better than it is.

Eh? You were doing fine until that part. The PKR is currently overvalued by abut 15-20% still despite the 5% or so drop recently conceded. The further correction needed cannot be far away.

 

[AZADPAKISTAN2009]

I would likely Just get rid of all Dollars .... every thing out ~ sell it

Just buy Gold, Pakistan have our own food resources so we are set locally we can use our own currency internally

The only thing we need to import from outside fuel , sure we will do barter trade
If we do barter trade with Venezuella/Iran/Russia/Saudia/Qatar we will get good quantity of fuel and we are happy

There is something fishy in system , which treates a client with 20 Trillion Debt better then client who has mere 60 billion debt and tell the one will less debt their curency has lower value

The whole equation does not makes sense from a logical stand point , if a beggar person goes to Bank and claims hey man give me 100,000 loan , the bank will say NO ...

But when this equation is applied at World Economics level this system is not application as 1 nation has racked up -20,000,000,000,000 worth of debt and yet still claims their currency is the strongest currency in world


Social Experiment:

Experiment #1
Go you your Bank Branch , a new one where you don't do business and then tell the account teller or service person

"I have a debt of 150,000 Dollar, however I want the bank to loan me $40,000 in good faith , and I will pay it back with interest. It might take 75 years to pay it back "

What will the Bank do to a normal person



Experiment #2
Tell the Bank branch man this as well

"I have this magic paper , and this is good as anything I want to buy a Expensive Ferrari car with this magic paper, and you (THE BANK) have to Talk to the Car dealer (Some person who is skeptical about me) and explain to him why my Magic paper is good and why I AM RICH man and not a beggar "


What will the Bank do to a normal person




Eventually when we will apply this story to the Global Economy we will quickly see!!! That this is exactly what is taking place world wide . However instead of a cautious Bank , there is a ENTITY which actually promotes the bad behavior. This entity - FUELS the bad habbits of an out of control borrower and expects the Poor countries to make up the "difference/Loss"


You can even see when this Entity Took control over the World Financial Systems
You can see , starting 1970-1971 , it started to promote unquestioned debt taking

The rich are printing paper money (+Magic Money)
The poor countries are told to give up more food,goods,resources and get a Magic paper in return


There is some serious flaw in this process , and to me this system appears flawed and someone in middle is making tremendous amount of profit and no one knows for sure who are those shadowy figures

Ref:
http://business.financialpost.com/i...00-points-heading-for-worst-week-in-two-years


I mean if you don't believe me just read about the destruction of oil assets in last 3-4 years in financial markets

I mean it tells you if the folks in charge want they can trigger changes in market and stop at any number they want becasue they control so much share from the wealth

 

[VCheng]

An interesting question comes to mind:

Given this new honest system:

will the minimum wage in Pakistan remain at 15,000 rupees per month? Happy laborers for sure!

(A lot can be bought with an annual income of 15,000x250x12 = $45 million.)

Or maybe the minimum wage will go down to 60 paisas per month? How about other salaries?

Maybe this dream has a nightmarish side too?

 

[salarsikander]

Should Pakistan Reevaluate the status of Dollar for trading in country becuase the country producing the dollar is on verge of collapse

We see from Time to time , that Pakistan produces Tripple or 4 times the Production of fruits, wheat and rice and flour and sugar however some how this magic paper money then takes away our Gains by some act of Magic

View attachment 450845


Under a Honest System here is how certain items would price out if it was fair system

i.e 1 Rupee = $250 Dollars conversion rate

• 2.5 Ruppes would buy you iphone
• 500 Rupees would buy you a Car
• 10 Rupee would buy you a PS4 video game player
• 1 Rupee would buy you a music player

The bottom line in understanding this riddle really is the Dollar really has no value
But there is this system of "Promises" and printers making Dollars and the world is being scamed quite hard by the Printers


PRINTING IS HARD BUSINESS

• Doing this does not involves , working in farm
• Doing this printing business does not involves watering in farm and seeding the farm
• Doing printing dollar business does not involves doing the hard work of farming

So if a country is broke by 20 Trillion dollars , when will the world countries just say look ok this is rediculous you are taking away "FOOD, COTTON, RICE, TEXTILES" and giving us this Paper and after 1.5 years you tell us that our currency is less then yours when you have 250 times more debt then Pakistan

This is what happens when pseudo intellectuals like you without proper reading let alone research post bullshit. For dumbass people I will suggest read economics for dummies or basic economic concept of scarcity.

Secondly, under what logic is 1 rupee equal to 250 dollars ?

An interesting question comes to mind:

Given this new honest system:

View attachment 452347

will the minimum wage in Pakistan remain at 15,000 rupees per month? Happy laborers for sure!

(A lot can be bought with an annual income of 15,000x250x12 = $45 million.)

Or maybe the minimum wage will go down to 60 paisas per month? How about other salaries?

Maybe this dream has a nightmarish side too?

250 Satan dollars equal to one halal mullah rupee of Pakistan is indeed very honest system. It will remove the yabudi interest system and all corruption from society.

 

[Mumm-Ra]

Should Pakistan Reevaluate the status of Dollar for trading in country becuase the country producing the dollar is on verge of collapse

We see from Time to time , that Pakistan produces Tripple or 4 times the Production of fruits, wheat and rice and flour and sugar however some how this magic paper money then takes away our Gains by some act of Magic

View attachment 450845


Under a Honest System here is how certain items would price out if it was fair system

i.e 1 Rupee = $250 Dollars conversion rate

• 2.5 Ruppes would buy you iphone
• 500 Rupees would buy you a Car
• 10 Rupee would buy you a PS4 video game player
• 1 Rupee would buy you a music player

The bottom line in understanding this riddle really is the Dollar really has no value
But there is this system of "Promises" and printers making Dollars and the world is being scamed quite hard by the Printers


PRINTING IS HARD BUSINESS

• Doing this does not involves , working in farm
• Doing this printing business does not involves watering in farm and seeding the farm
• Doing printing dollar business does not involves doing the hard work of farming

So if a country is broke by 20 Trillion dollars , when will the world countries just say look ok this is rediculous you are taking away "FOOD, COTTON, RICE, TEXTILES" and giving us this Paper and after 1.5 years you tell us that our currency is less then yours when you have 250 times more debt then Pakistan

Sigh!!! Please give me back the five minutes I spent while reading this BS. I suggest you again look at the post by @niaz . There is a wealth of knowledge in them for you. Perhaps the world can move again to barter system but the value of both good will have to be monetized. We will have to use a barometer for that purpose.What do you propose such a barometer be if not currency?

 

[AZADPAKISTAN2009]

In debt Poor man holding dollar is richer then a farmer with Bag full of eatable goods

In order to determine the value of the goods in Barter, you would still use New York Mercantile Exchange or some other International foum where the values are quoted in dollars. I have personally sold Mexican crude in the 1980’s to Cuba in exchange for their Sugar; the yard stick used was monthly average of the WTI & Sugar price quotes at the Nymex. Thus you can't get away from the Dollar. If you don't believe me, ask any Trading Company dealing with Iran or Cuba.

Besides, in such a scenario, Pakistan State officials responsible for the barter trade would have a field day. It reminds me of a comedy program on PTV long time ago called 'fifty fifty' where, given the choice; would be bride selected a ‘Peon’ at the Customs over a highly qualified engineer.

Nah how about we setup a new system call country to country Trade Barter charter
Pakistan's economic center lies in Pakistan, The country we deal with they also have their own processing unit

No need for Third party


Need to move away from any idea of , some middle man Taking CUT

 

[Nilgiri]

Eh? You were doing fine until that part. The PKR is currently overvalued by abut 15-20% still despite the 5% or so drop recently conceded. The further correction needed cannot be far away.

I mean in the grand scheme of things (long term) from structural consumption patterns (big mac index, PPP etc).

The further (short - mid term) devaluations are really Pakistan govt making things worse (esp from the debt + CAD standpoint in reference to their credit rating) a bit earlier (and ongoing still)....so the inertia from that is kicking in now. I tend to give the base underlying economy much leeway from that incompetence....having seen it frequently worldwide....but we will have to wait and see how much damage is done over time.

 

[Solomon2]

...I have personally sold Mexican crude in the 1980’s to Cuba in exchange for their Sugar; the yard stick used was monthly average of the WTI & Sugar price quotes at the Nymex. Thus you can't get away from the Dollar...

If the Bolsa Mexicana had futures contracts for sugar and crude, wouldn't you have traded in pesos instead?

 

[VCheng]

I mean in the grand scheme of things (long term) from structural consumption patterns (big mac index, PPP etc).

The further (short - mid term) devaluations are really Pakistan govt making things worse (esp from the debt + CAD standpoint in reference to their credit rating) a bit earlier (and ongoing still)....so the inertia from that is kicking in now. I tend to give the base underlying economy much leeway from that incompetence....having seen it frequently worldwide....but we will have to wait and see how much damage is done over time.

From historical trends, given Pakistan's basic underlying flaw of consuming more than what it produces, the PKR is likely to remain at an approximately 10% devaluation per year averaged over time, short periods of artificially managed floats notwithstanding.

But what do I know? 250 dollars to the rupee sounds soooooo very enticing!

 

[niaz]

If the Bolsa Mexicana had futures contracts for sugar and crude, wouldn't you have traded in pesos instead?

Everyone knows that "Futures" price can be manipulated by buying and /or selling large number of contracts in a short space of time. Less liquid the exchange (not many buyers / sellers) more prone to manipulation is the market.

Nymex is popular only because it is the most liquid exchange in the world. Here one could easily buy or sell thousands of contracts or WTI or of sugar in a Trading day without causing noticeable price fluctuation. If & when Bolsa Mexican becomes so liquid, traders would start using its quotes as well and would use Mexican pesos. Do you see that happening any time in the foreseeable future?

 

[Nilgiri]

From historical trends, given Pakistan's basic underlying flaw of consuming more than what it produces, the PKR is likely to remain at an approximately 10% devaluation per year averaged over time, short periods of artificially managed floats notwithstanding.

But what do I know? 250 dollars to the rupee sounds soooooo very enticing!

Essentially the structural long term undervaluing results from the large parts of an economy "insulated" from the world liquidity reference (USD in todays world).

What is exposed/visible certainly will have overvalue/undervalue (shorter term) trends in line with the largest forces that govern that visibility....and the govt certainly controls the largest levers regarding that. If the levers are not well controlled, yes over time there will be consequences...and you have the option of devaluing or taking major credit rating hits to name a few (basically last resort enforced liquidity control because you couldnt manage it internally before the rot set in) till a more sustainable equilibrium is reached.

Pakistan is in dire need of economic and political reform (given the severe opportunity cost of diverting more PKR away from actual internal spending to finance debt/CAD). I generally choose to spectate rather than comment much these days, something needs to change fundamentally.

But yah I think most ppl here fundamentally get why the exchange rate cannot be magically set to some whim/dictate of an easy fix....so theres that at least....i.e there is some hope, but more common sense needs to permeate in places it counts the most.

 

[niaz]

One very serious problem that has not been debated is the lack of “Confidence” in Pak Rupee by the Pakistanis. Politicians and most of the affluent and wealthy Pakistanis put their trust in US Dollars and the UAE Dirham (Directly linked to the dollar at a fixed exchange rate of 3.67). This results in constant high demand of the US Dollars and hence continued Pak Rupee decline in value.

It is estimated that up to $10-billion is being siphoned off Pakistan each year by the 'Hawala' system. The figure may be an exaggeration but the FE funds kept out of Pakistan this way are substantial indeed.

Imran Khan himself recommended his followers to use illegal ‘Hawala’ in his 2012 speech!

https://www.khaleejtimes.com/nation/general/pakistani-expats-cry-foul-8232-at-imran-s-hawala-call

IMHO the suggestion to get away from the US Dollar that most Pakistanis trust implicitly is nothing more than an exercise in futility.

 

[mohd497]

Before one gets into the reasons as to why so many countries use dollar; one must understand how it all started. Being an Oil Trader, I had to deal with Iran and was obliged to read a lot of literature on the currency dealings to understand intricacies of the international currency trade.

Historically only the silver and gold coins were used in the international trade. If you traveled to another country, you exchanged gold & silver coins of your country with the coins of that country equal in value to the amount of silver & gold in your coins. British Pound was called Pound Sterling because it represented the value of one pound in weight of sterling silver (92.5% silver content). Because the international trade often involved goods worth tons of gold /silver, promissory notes or “Paper currency” came into being. However, this required that the country had to back up her paper currency with gold reserves and pay up in gold/silver should the holder of the paper currency so desired.

For the record, £20 note has the following printed on its face:

“I promise to pay the bearer on demand the sum of twenty pounds’ signed by the Chief Cashier on behalf of the Bank of England.

This state of affairs continued until a conference of all of the World War II Allied nations that took place in Bretton Woods, New Hampshire, USA in 1944 decided otherwise.

An agreement called ‘The Bretton Woods Agreement’ was concluded. Therein the participating countries agreed that their Central Banks would maintain a fixed exchange rate between their currencies and the dollar. The other currencies were no longer backed up by the gold. Instead the US dollar was fixed at $35 to an ounce of gold with the United Sates keeping sufficient gold reserves in Fort Knox to back the dollar and USA was the only country that could print dollars.

It was understood that if a country's currency value became too weak relative to the dollar, the central bank would buy up its currency in the foreign exchange market decreasing the supply consequently raising its price and should its currency became too high, the bank would simply print more currency notes increasing the supply and lowering the currency value in dollar terms. The countries could however regulate their currencies by officially re-valuing or de-valuing their currency vis- a- vis the US dollar. This was because the United States held three-fourths of all the world's supply of gold and no other country had enough gold to back her currency.

In the aftermath of the Vietnam War; USA was no longer able to back up the dollar with gold and rather than allowing Fort Knox reserves to be depleted; Richard Nixon separated dollar from gold in 1971. By that time, the dollar had already become the world's dominant currency.

"What this means is that the US Dollar does not in real sense fluctuate at all, it is the other currencies that weaken or strengthen versus the dollar."

Now virtually all the international commodity prices are quoted in the US dollars and 85% of the FOREX trading is in dollars; even countries such as Iran that cannot deal in dollars; sell their goods priced in dollars and also import items priced in dollars. Of course Iran has to exchange the dollars with Euro, Yen or the Chinese Yuan in the open market. Hence Iran, despite being alienated from dollar, is still affected by the US dollar fluctuations.

The only other currency which can possibly replace US Dollar is the Euro. However as of 2nd Qtr. 2017 only 20% of known central bank foreign currency reserves were in Euros.

Pakistan’s economic problems are not so much with the fluctuating dollar but with the abysmal Tax collection and poor export performance. In my humble opinion, despite all of its faults, US Dollar is the only currency that is acceptable in almost all the countries of the world and thus the only ‘Global’ currency. In conclusion, I would say that dumping the dollar would bring no ‘Real’ benefit to Pakistan; instead it would be a boon for the currency brokers / banks who would be earning commission by converting the dollars into Euro or whatever currency Pakistan decides to adopt.

poor export performance? POOR? are you sure? like US have such a remarkable export performance vis a vis import or any other developed country have such a great export performance. I say pakistan have more export performance then most of the so called developed countries.

PROBLEM IS PAKISTAN CURRENCY IS ARTIFICIALLY KEPT LOW. WHAT COUNTRIES DO IS BUY OUR PRODUCTS USUALLY CLOTHES IN DIRT CHEAP PRICES AND SELL IN HIGH PRICE IN THERE COUNTRY.

I am no fan of barter trade but bring back the gold standard.