Rise is Swiss Franc only harms exporters who are greedy

I heart the swiss francThe Swiss central bank recently stopped devaluing their currency, which is great news for everyone but currency traders and people who live on the dole. However, this article and many others espouse the harmful myth that a strong franc hurts exporters, since their goods become more expensive in other currencies. This only applies to greedy exporters. The rational exporters will LOWER their prices since the franc is more valuable.

Let’s say I’m selling a watch for 10,000 francs, and each franc is worth one ounce of oil. This means I’m getting paid 10,000 ounces of oil. If the franc rises 30 percent in value, than each franc will be worth 1.3 ounces of oil, and now I’m selling my watch for the equivalent of 13,000 ounces of oil, which makes my watch over-priced, since comparable watches still only cost 10,000 ounces of oil.

I MUST lower the Swiss Franc price for my watch to about 7,700 francs, which returns the REAL (not nominal) price to 10,000 ounces of oil. Then my sales will remain the same.

Any action by the Swiss central bank merely requires a price change. I must focus on the value of money, not the quantity of money. As I like to say, don’t count your money. Value it.

See article on Economic Policy Journal

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