Oh, very goodFebruary 5, 2017 Tim WorstallEconomics10 CommentsDon’t underrate the importance of the very weak pound (soon to be called “ounce sterling”). previousBlimey, being an economics prof is more glamorous than I thought!nextHe’s losing it 10 thoughts on “Oh, very good” synp February 5, 2017 at 1:01 pm “Ounce sterling” ? Not quite Sterling silver is now $14.74 or 11.81 GBP per ounce. Andrew M February 5, 2017 at 1:56 pm Excellent comment at the bottom: If you think Britain will lose a lot of GDP by withdrawing from the EU, could you please estimate the GDP increase that would be experienced by the following countries if they were to join the EU: 1. Iceland 2. Canada 3. Australia 4. Japan Do you believe they should do so if they could? bloke in spain February 5, 2017 at 2:52 pm Usual economist cockwaffle; “A while ago I estimated the costs of this “hit” at 5,625 pounds per capita, ” An accuracy of five quid when you couldn’t forecast GDP without a Brexit, two or three years forward, to a country mile in whole numbers. The one thing we know about economists is they don’t know nuffin’. Bloke in Germany February 5, 2017 at 7:21 pm Having a low-valued currency is good for you. Unless you are Germany, in which case you are apparently living the high life off your pathetically undervalued currency. While simultaneously overvaluing Greece’s currency. And unless you want The United Trump of America to like you. Bloke in Germany February 5, 2017 at 7:28 pm It also makes everything forrin ~20% more expensive. Either as a consumer you pay passed-on price increases, or as an importer you swallow the losses/pass them on to your staff and consumers. At the end of the day, consumer pays. So, actually, given the amount of consumption of forrin products in the UK, that ~£5k loss of GDP per capita from Brexit doesn’t look all that ridiculous now, does it? Seeing as £= €1.32 pre-referendum has become £ = €1.16. Chris Miller February 5, 2017 at 9:32 pm Unless you are Germany, in which case you are apparently living the high life off your pathetically undervalued currency. While simultaneously overvaluing Greece’s currency. No – Germans are poorer for being in the euro, but BMW sell more motors. And since the German government is run by and for the benefit of German industry, that’s the way it will stay. It also makes everything forrin ~20% more expensive. So perhaps we’ll but more Jags and fewer Beemers. Gosh, this economics stuff is more complex than it looks! TomJ February 5, 2017 at 11:11 pm BiG: You are ignoring 2 effects. 1. If stuff from Forrin is now 20% more expensive, consumers may replace it with stuff not from Forrin as it is no longer more expensive than that Forrin stuff, thus boosting business of non-Forrin producers. 2. Our stuff is now up to 20% cheaper for consumers in Forrin, so they may find it more attractive, buy more and again boost business for those lucky non-Forin producers. One might look at the plans for the future of steel production in Port Talbot in May 16 and Dec 16 as an illustration. Now whether these effects are more sigicant than the one you mention or merely mitigate it will be down to all sorts of other factors, but to ignore them is perhaps disingenuous. MyBurningEars February 6, 2017 at 12:06 am FWIW, the Marshall-Lerner condition is on the A-level economics syllabus these days. The Marshall–Lerner condition (after Alfred Marshall and Abba P. Lerner) refers to the condition that an exchange rate devaluation or depreciation will only cause a balance of trade improvement if the absolute sum of the long-term export and import demand elasticities is greater than unity. Richard February 6, 2017 at 2:44 am Pound becomes an ounce means value falls to one sixteenth of what it was; using RPI that’s what happened between 1910 and 1978, so basically the effect of socialism from the “People’s Budget” to just before Thatcher. John February 6, 2017 at 6:03 pm Using the Swiss franc as a basis (one of the few currencies which has never significantly revalued since the 1800s), the pound has dropped from buying 26 CHF at the start of the Latin Monetary Union to 1.2 CHF today. Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.