Esim - Peg = Revenue
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wuremad


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Peg = Revenue (Political)
Posted 11 years ago by
wuremad    
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Here's an idea was going to introduce in Congress, but I wasn't elected. The government has had a habit of printing USD to defend the value of the USD. This is bad for America and there is a much better alternative.

The Problem
First, we have to understand where the USD gets its value. In real life we it has some small value simply because the government says so. In e-sim that doesn't work. Workers only have to be paid $1 a day. So, in theory the dollar could be effectively worthless (see some of the conquered nations). When it comes down to it the dollar is valuable for two reasons.
1. The USA is a powerful nation with a large product market. This creates demand.
2. The USD is limited in quantity. (supply)



The government keeps printing money to sell on the money market. This means supply goes up. The USD becomes easier to get and less scarce. Because the USD is more plentiful people are willing to pay less for it and the value goes down.



The Solution
Buy Low, Sell High
There is a reason Wall Street works on this principle. This is how you make money. So, how does the government live by this policy? Adjust the peg by just a little bit. The DoI can sell USD at a rate of $1=.0401gold and then buy it back at a rate of 1gold = $25.05. This small adjustment will generate more money for the government without increasing taxes.

With this extra money the government can continue to defend the peg without printing money.



Thank you for your time and consideration. - wuremad


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