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by _factor 716 days ago
Exchange rates used to be pegged to labor. The futures market obfuscated that and is controlled by a central bank through government issued subsidies which cause food surpluses which “should” reduce the price of produce.. if not for the manipulated futures market.

I’m sure population density is a variable in this equation as well, I just can’t figure out where to pin it.
1 comments
JumpCrisscross 716 days ago
> Exchange rates used to be pegged to labor

When?!

> futures market obfuscated that and is controlled by a central bank

Where? FX trading in open capital account economies are between lightly and unregulated.

> sure population density is a variable in this equation as well

Total factor productivity [1].

[1] https://en.m.wikipedia.org/wiki/Total_factor_productivity

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_factor 716 days ago
> When?!

Diplomatic agreements between nations throughout history. Your land has water, mine has food, we set the value of trade and baseline the currency. The unavoidable cost is the minimum time and labor to transport and extract the resources.

The supply and demand indirectly adjust the transaction prices through multiple layers of exchange. Hence the border tariffs having an impact on exchange rate.

Simplified, but draws a picture.

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