De valuating

De-valuating the Currency

Typically, a devaluation is achieved by selling the domestic currency in the foreign exchange market and buying other currencies. Suppose China sells one trillion Renminbi (Chinese Dollars) and buys 157 billion US dollars. From the point of view of the market, it is as if the supply of Renminbi just increased. As in any competitive market, an increase in supply will cause the price (i.e. the exchange rate) to fall: one Yuan will be worth less than before.

Devaluations are good for a country’s balance of trade. Companies based in China ultimately care about how many Yuan they end up with. Suppose that the value of the Renminbi is 10 Yuan = $1US. That means that a Chinese product priced at 10 Yuan would cost an American $1 to buy. Now suppose that the value of the Renmimbi falls by half: 10 Yuan = $0.50.

Now the same product, still priced at 10 Yuan, will only cost an American 50 cents. It’s as if everything China exports just got cheaper! This fall in the apparent price of Chinese exports will make people in other countries want to buy more Chinese products so that China will experience an increase in its exports.

The argument also works in reverse: to a Chinese person, the devaluation makes it look as if American products got more expensive, so Chinese will demand fewer American (and British, and German, etc.) products and China will import less. Together, these two effects mean that China’s balance of trade (i.e. the difference between exports and imports) will improve as a consequence of the devaluation.

Bottom Line

World Bank

It’s not legal but the central bank can also print more money and give it to the government, which in turn can use it to pay the state debt.This will cause inflation, since there is more money representing the same goods and services. Inflation will cause the money to devalue.

The world bank that the Federal Reserve is a part of is the bank that buys these currencies from these countries. And this is why the Bankers and not the Politicians are truly in charge, They can print more money and give it to any Country they want. This is known as playing favorites and it happens all the time. These people are the ones who finance the wars of the world.

Interest Rates

Lastly the world bank can fuck with the interest rates of a particular currency like the United States, and individually affect the value of that currency specifically.

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