Like why can’t some country say something like “our country’s currency value will be 200 times that of US dollars ” . And who determines this value or how it is determined. And why it constantly changes.
In: Economics
Sure, Randomistan could say “our currency is now: 1 of ours to $200USD.”
But if that value isn’t realistic, no currency traders will engage in transactions and Randomistan will be screwed. And no/minimal tangible goods traders would trade with them either.
If Randomistan tries to price their currency way out of what it should be, no one will sell them food/oil/raw materials/etc. at the price they want, and vice versa.
Picture your street with a bunch of garage sales. Got a bunch of them all selling KidToy1 at $3, except that one guy down the street with an overgrown lawn and rundown house is selling KidToy1 for $25. Who’s going to buy it from him at $25 when they can get it for $3 next door?
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