You've got to get Poor to get Rich

The title of this article is borrowed from my good friend, it is his favourite saying. It takes two sides. One is that most people and countries work in order to increase their wealth, ie they desire savings or to be able to buy more goods and services, thus increasing their living standards. The second is that Central Banks believe that a lower value currency on the exchange market is a good thing for the country. By 'good thing' I mean the low currency makes the country better off. However you cannot have your lunch and eat it too. A low currency and a high living standard and high savings (that are able to purchase good and services in the future) are mutually exclusive. You either have a strong and valuable currency that has high purchasing power, or you don't.

Central Banks cite a high currency as a reason to cut interest rates, because in their view it is overvalued. A currency is simply the exchange ratio between goods and services in two different countries. To imply this ratio is overvalued, is incorrect. That is because it is virtually impossible to quantify what the ratio should be. How do you compare the price of a steak in Darling Harbour to a steak in Rotorua? Or a Lexus LX570 purchased from a prestigious dealership in Sydney who offers many extras to that of a dealership in the outskirts of Durban? There are too many factors at play to simply state that the currency is over or undervalued. The Big Mac index is a guide, but there is more to the price of the burger than just the ingredients. Rent and wages are two big factors that need to be accounted for, but are difficult to do so.

The idea that you can lower the currency's value today, thus decreasing the living standards and purchasing power of the citizens and then at some point in the future, this will reverse and increase the living standards and purchasing power is absurd. But this is exactly what the Central Bank is saying when they use an overvalued exchange rate as a reason to cut interest rates. This does assume that the Central Bank wants a prosperous country - this could be debated, as in recent years their actions are questionable and one does wonder who they work for.

Understanding the Rise of Donald Trump

People are not happy. This true on both sides of the isle. The fact that Bernie Sanders and Donald Trump, who are both extremely left and right respectively, have gained any traction is remarkable.  The status quo is no longer an option for many people. The two parties have offered run of the mill candidates, that have shown no imagination and no ideas to actually changing anything, for too long. Obama run on 'Change. Yes we can'. What exactly has changed? In the eyes of many Americans, nothing, and this is why the Republicans will have Donald Trump as their presidential candidate.

Donald Trump. Source: wikipedia.com

The media, including social media is all over Donald Trump as to why he should not become President. The mainstream media is so intrenched (and some would argue each media outlet is just an extension of their respective party), that every article that bad mouths Trump is encouraging more people to vote for him. I have struggled to find a positive article written about Trump. Has he really said NOTHING that would benefit the country? Or has everything he has commented on ruffled the establishment so much they have to discredit him?

This same media has for all intents and purposes, endorsed every Presidential candidate in memory. These Presidents who have ultimately been elected have not resulted in much, if any benefit to everyday Americans and have only gone on to increase the size of government and in rich Wall Street. This has resulted in a loss of trust for any candidate who the mainstream media portray as an ideal President. By default, anyone who is accepted as the right person for the job, actually is not someone who will work for the everyday person.

What is also helping Donald Trump's campaign is the likes of Russell Brand and John Oliver (among many others) coming out and giving every reason not to vote for him. The fact that they have remained silent on previous nominees, who have gone on to win and maintained the status quo, is the reason they are helping Donald Trump. Trump is different in every way a candidate could be. He is not cosy with big business and states he owes no one anything.

How bad will Donald Trump be? He may well have the House and Senate behind him, but any crazy ideas (like the wall), would only come into being through Executive Order. We might see the limits of the amount of Executive Orders reached under Donald Trump! Time will tell how this all unfolds.



** I am not endorsing Donald Trump, just attempting to explain his popularity. Actually there is no candidate that I would vote for from either main party.