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State of economy worse than initially estimated: BOT

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If BOT wants to increase inflation in Thailand it has a number of choices,increasing the minimum wages by a substantial amount would work and opening up the country to foriegn competition would also work.

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10 minutes ago, Trillian said:

As a consequence of those things there's nothing in your simple solution that would actually result in a depreciated currency, only in greater lending by banks to the general population.

 

 

Only up to a certain extent.

 

If the central bank creates too much money that reaches the general population, demand increases, then prices increase, then inflation builds up.

 

If this goes too far, people lose faith in their currency and rush to exchange it against foreign currencies, perceived as safer.

 

Meanwhile, foreign exporters don't accept to be paid with this volatile currency anymore.

 

From there the depreciation starts, and it generally ends badly.

 

This kind of monetary policy is only implemented by desperate countries, such as Zimbabwe or Venezuela.

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6 minutes ago, Brunolem said:

Only up to a certain extent.

 

If the central bank creates too much money that reaches the general population, demand increases, then prices increase, then inflation builds up.

 

If this goes too far, people lose faith in their currency and rush to exchange it against foreign currencies, perceived as safer.

 

Meanwhile, foreign exporters don't accept to be paid with this volatile currency anymore.

 

From there the depreciation starts, and it generally ends badly.

 

This kind of monetary policy is only implemented by desperate countries, such as Zimbabwe or Venezuela.

In the future, paying for your somtam in cash...

 

6827.jpg?source=Alphaville

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Posted (edited)
10 minutes ago, Brunolem said:

Only up to a certain extent.

 

If the central bank creates too much money that reaches the general population, demand increases, then prices increase, then inflation builds up.

 

If this goes too far, people lose faith in their currency and rush to exchange it against foreign currencies, perceived as safer.

 

Meanwhile, foreign exporters don't accept to be paid with this volatile currency anymore.

 

From there the depreciation starts, and it generally ends badly.

 

This kind of monetary policy is only implemented by desperate countries, such as Zimbabwe or Venezuela.

Yes of course. But the scenario that was presented above was, "give it all the banks and corporations to prop up their businesses". That process doesn't get the money into the hands of the people who need to spend it, to increase demand, to increase inflation...how do you do that?

 

Extending credit to the banks is one thing, having the banks find qualified borrowers when the average monthly wage here is so low, is something else entirely.

Edited by Trillian

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Basically the Thai baht is strengthening because the economy is shot, the economy relies on tourism and there is no tourism, there's massive unemployment, exports are down, negative GDP and I think there's a lot more. How can this be a safe haven? How can the baht remain strong? Never did quite understand economics. Maybe someone can help me.

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23 minutes ago, Trillian said:

If BOT wants to increase inflation in Thailand it has a number of choices,increasing the minimum wages by a substantial amount would work and opening up the country to foriegn competition would also work.

I'm certain both of these are too priorities for the government and Thai oligarchs. Genius.

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9 minutes ago, dinsdale said:

Basically the Thai baht is strengthening because the economy is shot, the economy relies on tourism and there is no tourism, there's massive unemployment, exports are down, negative GDP and I think there's a lot more. How can this be a safe haven? How can the baht remain strong? Never did quite understand economics. Maybe someone can help me.

Not really! The economy doesn't rely on tourism, tourism is only 12% of GDP. The country does rely on exports which is 60% of GDP.

 

As things stand today last months export figures were pretty good, surprisingly so, tourism numbers were however very low. But the underlying health of the Thai economy is pretty strong, low government borrowings (42% of GDP), high foreign currency reserves (USD 220 bill.) and low social care overheads. And this is a comparative issue, the Thai economy may not look great currently but the fundamentals mentioned previously are very strong and by comparison to some other larger western economies who are borrowing trillions of dollars, Thailand is in great shape. 

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Posted (edited)

tell that to the 1000s that are staving over here

Edited by whiteman
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Just now, Trillian said:

Not really! The economy doesn't rely on tourism, tourism is only 12% of GDP. The country does rely on exports which is 60% of GDP.

 

As things stand today last months export figures were pretty good, surprisingly so, tourism numbers were however very low. But the underlying health of the Thai economy is pretty strong, low government borrowings (42% of GDP), high foreign currency reserves (USD 220 bill.) and low social care overheads. And this is a comparative issue, the Thai economy may not look great currently but the fundamentals mentioned previously are very strong and by comparison to some other larger western economies who are borrowing trillions of dollars, Thailand is in great shape. 

I want a second opinion. Tourism is only 12% of GDP. Seems a lot. Military spending in USA as a percentage of GDP is around 3% and that's a lot. 12% loss you're saying isn't much.

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8 minutes ago, dinsdale said:

I want a second opinion. Tourism is only 12% of GDP. Seems a lot. Military spending in USA as a percentage of GDP is around 3% and that's a lot. 12% loss you're saying isn't much.

A nuclear bomb could wipe out Thailand and Trillian (fka Saengd) would still bloviate about the current account balance and tell us how great everything is.

 

12% is a lot.  And when that 12% gets spent onwards (velocity of money), that supports a lot of domestic consumption (another portion of gdp).  Then, when incomes are lower, people can’t service their debt (or take on more) and it then starts to feed on itself becoming a deflationary spiral.

 

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20 minutes ago, dinsdale said:

I want a second opinion. Tourism is only 12% of GDP. Seems a lot. Military spending in USA as a percentage of GDP is around 3% and that's a lot. 12% loss you're saying isn't much.

Tourism is an export and is 20% of all exports, tourism is 12% of GDP overall.

 

Not all of the 12% has been lost, remember, that's an annual figure. January saw about normal numbers, February and March saw a decrease, April saw zero. It might be that later in the year there is an upturn in the numbers, overall the decline in GDP for the year is estimated to be about 5.5%.

 

https://tradingeconomics.com/thailand/tourist-arrivals

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6 minutes ago, Airalee said:

A nuclear bomb could wipe out Thailand and Trillian (fka Saengd) would still bloviate about the current account balance and tell us how great everything is.

 

12% is a lot.  And when that 12% gets spent onwards (velocity of money), that supports a lot of domestic consumption (another portion of gdp).  Then, when incomes are lower, people can’t service their debt (or take on more) and it then starts to feed on itself becoming a deflationary spiral.

 

I find your posts increasingly offensive, threatening and personally motivated rather than anything related to the subject matter. I have asked you to stop following me around and making your inane remarks, please find somebody else to try and intimidate. Thank you.

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Just now, Trillian said:

Tourism is an export and is 20% of all exports, tourism is 12% of GDP overall.

 

Not all of the 12% has been lost, remember, that's an annual figure. January saw about normal numbers, February and March saw a decrease, April saw zero. It might be that later in the year there is an upturn in the numbers, overall the decline in GDP for the year is estimated to be about 5.5%.

 

https://tradingeconomics.com/thailand/tourist-arrivals

Pity January wasn't zero tourism and that CCP suck up of a PM closed the borders. Then we wouldn't be having this conversation.

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8 minutes ago, Airalee said:

A nuclear bomb could wipe out Thailand and Trillian (fka Saengd) would still bloviate about the current account balance and tell us how great everything is.

 

12% is a lot.  And when that 12% gets spent onwards (velocity of money), that supports a lot of domestic consumption (another portion of gdp).  Then, when incomes are lower, people can’t service their debt (or take on more) and it then starts to feed on itself becoming a deflationary spiral.

 

I guess you don't enjoy the wisdom of this person?! 

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1 hour ago, dinsdale said:

I want a second opinion. Tourism is only 12% of GDP. Seems a lot. Military spending in USA as a percentage of GDP is around 3% and that's a lot. 12% loss you're saying isn't much.

Of course 12% is a lot, and it doesn't include the ancillary services gravitating around tourism. 

 

But numbers are not everything. 

 

Thailand's social structure, with many unemployed people able to regroup with their families upcountry, helps a lot during times of hardship. 

 

The country is going to suffer obvioulsy, but proportionally less than the overindebted developed countries and their populations addicted to public handouts. 

 

Thailand also has the geographic advantage of being in the East and South East Asia, which has suffered far less from the pandemic than Europe and America. 

 

The population of this part of the world is large enough for a market economy to flourish again in the near future. 

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