Friday, August 27, 2010

International Economics, part 1, international money transfers

I have been looking, and thinking, about economics recently, and have written a lot out.
Most people invest their money in some way or another. Most do it by buying bonds from a government, buying stock from a company, or putting their money in a bank in their own country. These are good ways of investing. There is one way though that can be better than all three given the right economic environment. That would be investing in foreign banks. By investing in a foreign bank you get the following benefits.
  1. When you go to that country, you have a guaranteed amount of money to draw upon that doesn't have to be exchanged which gives you a precise amount whenever you go there.
  2. Assuming that the country you put your money in protects bank accounts, it is guaranteed to be protected.
  3. By investing in a developing nation their economy can be expected to grow which means there will be more demand for their currency which will cause their currency to go up in value compared to other currencies. This means that by investing in these countries you are able to while getting interest have your money's value in your home's currency go up at least 100-300% which is far more secure than stocks, which when you take the money home means that the value of your home's currency will then appreciate in value, making everyone better off and better to travel. This would make the entire world eventually become more even if the currencies were allowed to balance.
This is illegal in many countries because the leaders fear that the money won't come back to their country there are several arguments against this however.
  1. The person investing will eventually bring the money back home which will make their home country more wealthy.
  2. The amount of money transferred comes back which is completely different from outsourcing manufacturing to countries like China and southeast Asia. The money that is sent to these countries has been shown to not come back which is part of the reason why the American/Canadian/European/Australian economies have become potentially unstable recently is because of the loss of money. This is far worse than investing in foreign banks which makes the argument against overseas investment mute.
Basically, regulating international banking is pointless, except that it is often used to move to countries to fund drugs or terrorists. Then their should be an alliance of countries that allow money to be transferred within their borders as long as:
  1. The money is kept away from drug and terrorist organizations and if moved outside the union will be inspected.
Countries I would look at joining are: the USA, Canada, Australia, South Africa, the Eurozone, Japan, South Korea, New Zealand, Norway, UK, and several others that have shown their intentions to fight drugs and terrorism.

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