Thursday, April 9, 2015

Euro getting crushed

This is a shout out to Matt Franko, who contributes to this blog and who has CONSISTENTLY been right on the euro (and yen, Canada, etc) all along because of a correct understanding that IT'S ABOUT PRICE NOT QUANTITY!!!

(It's also not about "technicals" or charts, btw.)

Someone sets the price and Matt has been telling us, no, SHOWING US, exactly who: non-dollar exporters. (i.e. German exporters, Japanese exporters, Canadian exporters, etc.)

This is how it works, people.

Kudos, Matt. Don't give this info out anymore, just trade it and make yourself a fortune!

6 comments:

NeilW said...

Strikes me that the Carry Trade funding currency has become the Euro since the Swiss stopped propping it up.

I'm not seeing the price changes in GBP land that you seem to be in the US.

John said...

Is Matt Franko's insight that "it's about price not quantity" one that is not shared by MMT?

If it isn't a shared insight, is there a reason for this?

On the other hand, if in fact it is a shared insight, why is one of the major architects of MMT giving what looks like a diametrically opposed opinion?

Matt, if you read this, where could someone interested in this area learn more? It seems you may be on to something very interesting.

How would differential interest rates then factor into all this? Or is this yet another misleading neoclassical theory that has infected an understanding of international trade/finance and foreign exchange?

Ignacio said...

The most hilarious part if that it completely nullifies the theory that CB's can devalue the currency by printing money.

And the whole world is captured by this myth, even the CB's themselves.

mike norman said...

John,

Ostensibly this is a shared insight.

"...why is one of the major architects of MMT giving what looks like a diametrically opposed opinion?"

Good question and a question that everyone would like answered, especially since his outlook has been wrong forever.

Just don't ask that person because he gets very irritated and threatens you.

Ignacio,

Yes, absolutely correct. And hilarious as you say.

sths said...

Is there really that much difference?

From what I understand, the whole "harder to get (aka quantity)" argument is just saying

1. The importing nation's gov imposes austerity.

2. The lower goverment spending flows through the economy making all the participants in the economy transact less.

3. This makes it harder for the exporters to "get" the importer's currency.


Isn't this very similar to the price argument? The exporter lowers the price demanded for the products in order to maintain sales because the importers are now buying less due to austerity.

NeilW said...

"Isn't this very similar to the price argument? The exporter lowers the price demanded for the products in order to maintain sales because the importers are now buying less due to austerity."

Mike an Matt's argument is the other way around IIUI

Euro exporters are dropping their prices to maintain sales though the Eurozone is in deep austerity.

Not seeing that in Europe outside the Eurozone area. It's much more likely to be Carry trade action given the expansion in Euro borrowing (aka money creation) which of course makes the Euro 'easier' to get.