But in ME countries, there's no social security.

Not really, that's mean our money never devalue until current situation.
Deflation are not scary, what is scary is some people like you spreading flaws
Palm oil and rubber price are testing new low.
You may say export are improving, but not our economy, as those money still go back to foreign company's pocket.
I can have USD1 trillion of export products, but only rm10 billion goes to people.
Such number only looks good on paper, but actual people are not getting any benefit from it.

Still poor man tool theory intact.

At that time, US company found it hard to compete against like Sony, Toyota, Panasonic, hence need to low currency to compete.
While there were plenty of political issue involved as well, which needless to talk into it further as get derailed from financial topic.

Fundamentally, there is nothing good or proud about championing with lower currency.
When you constantly and repeating need lower currency to compete, it just means the economy doesn't step up.

Just like cheapo phone vs Iphone example I given.
You can use cheapo phone (lower currency) as start up, kick start, but as time goes, you need to value added making premium phone that people want instead continously relying on people want to buy from you just because you are cheaper.

Economy growth is about improve people income and purchasing power, this is the ultimate goal.
Central banks can build up billion or trillion of foreign currency reserves, but people income and purchasing doesn't increase, then the economy growth doesn't yield much meaningful result.
Just like Japan, it has trillion of foreign currency reserves, but economy is stagnant, then the reserves is not much meaningful to its people and economy as a whole.

Same with China, that's why they allow their currency to rise steadily (which they can resist if they wish to, if based on reason of championing low currency) as this is one of the way to improve their people purchasing power and become a stronger economy.

Deflation not scary? Better go study economics lah.

Why Deflation Is Worse Than Inflation

Do you even know what our biggest exports are or not? And you talked as if every factory in Malaysia is owned by foreigners.

No benefit from higher exports? How about having jobs and economic growth?

So you admit that the US also had to rely on weaker currency to compete.

When your competitors are more or less as competitive as you, example: Japan and South Korea, and suddenly your currency goes up 20%. Would that be a problem or not?

If the US dollar appreciates 1000% against other currencies, Apple also have to close shop or move to other countries lah. How many idiots do you think would buy the iphone at RM30,000?

Purchasing power is definitely important, but of more importance is economic growth and jobs. Do you want to have a strong currency but a negative growth rate like Brunei?

As I said before, there must be a balance in between, but championing lower currency continously is not something to proud about nor a right direction.

or
in other word, it is troubling for gov to say to their people, our currency become lower, hurray, we can do more business... , (it does in certain way, but it just means something is not right prior before devaluation)

You cannot always rely on cheaper currency to compete against rival. We are not talking about appreciation that hurt but constantly using poor man tool aka lower currency to undercut rival.

There is a difference between the currency appreciation hurt your business vs, constantly need to lower currency in order to compete.

Eg.
If USD appreciated 10%, or even 20%, people still buy Iphone
vs
Your currency do not drop, no business, hence need to lower 10% before can get a business.

Lower currency can be good in term of the kick start of ailing economy (just like 98 onwards), but it is like steroid, which cannot rely on it forever.

It's a delicate balancing game. We cannot have a very weak currency because inflation may be a big problem. We cannot have a very strong currency because exports would suffer. We have gone through '97 and learned how bad a strong currency could be for us.

Even if the iphone goes up 100% in price, surely still got people buy but I can guarantee you Apple's business would suffer. It's been like this for decades for US large companies such as IBM - strong currency would erode their performance.

If you ask me, it would be better if our economy is 99% local demand, then it doesn't matter how strong our currency would be.

Malaysia won't able to have high local demand that absorbing what been produced here, unless people here are high income to start with.
That's why I said, economy is about driving up people income is the ultimate goal which make an economy stronger.

While US economy is more about domestic demand, that's why their economy can be strong.

The best is still a stable currency level, not too strong nor weak.

Standing from seller point of view, sure deflation are bad.
But as consumer, deflation is good actually.
Like the price of milk in the world already reduced but Malaysia still selling expensive, they even increase the price, in this case, what Malaysia need is deflation.
I no need to know what we are exporting, I only need to know what people get from that.
Do I getting anything from the high export figures? Nope, nothing. But I do know Indonesia gets about rm 1trillion from Malaysia last year

deflation...

bad for biz owners
bad for bursa stockholders
bad for property speculators
bad for tax collectors
bad for gomen wastage/songlap

good for small fella with stagnant wages (already stagnant in high inflationary environment)
good for retirees, housewives, civil servants (job salary/pension guaranteed) as prices will drop
good for locals as foreign workers will go home
no change for debt holders

so... good for supersound, good for me. can't say for artus and others.

This post has been edited by AVFAN: Apr 30 2015, 06:22 PM

This is the problem when you don't have facts. Indonesia got 1 trillion from us? What nonsense are you talking about?

No job but prices drop good for you or not?

i m not worried about my job.

that's why i can't say that for u n others.

You got my point
Because those relying on speculations will suffer the most

Legally is USD300billion transacted last year based on money transfer agents.
But, illegal Indonesian workers are a lot, those transactions never been registered.

With job or without, that's not an issue.
More important is our personal debt will be reduced.
But reading newspaper today, credit card debt reached rm32 billion this month, banks says just the interest can get about rm4 billion. For this, bank will welcome inflation. But card holders will hope for deflation

In economics theory, in an inflation, wages shld rise in tandem too with the good economy. In a deflaton, there will be job cuts. Hence, in theory, inflation SHLD BE better than deflation. But not in the real world.

that should happen in an efficient economy. and there are reasons why that does not happen in boland.

it is the prolonged distortions arising from economic policies, gomen intervention, corruption and excessive use of cheap foreign labor that has and will continue to negate it completely.

in other words, nothing will improve with whatever conditions. unless with a total overhaul.

This post has been edited by AVFAN: Apr 30 2015, 07:24 PM

Again, in economics theory, we call it Structural and Fiscal Reforms. But realy,... in bolehland,... it will take lots of bloodshed to do this.

You know how to count or not?

Indonesian workers in Malaysia remitted almost $1.2 billion back home in 2012

Indonesian workers where got so much money (USD300 billion) to remit home? Talk nonsense lah you.

I said last year

What year is still nonsense. Show proof lah. Talk is cheap.

Ringgit declines most since December as U.S. data boost dollar
http://www.theedgemarkets.com/my/article/r...ta-boost-dollar