Compendium: Devaluation and Revaluation (Pt. I of II)

There may be moments where the Price of a Currency pegged to the Work-Standard may be underpriced or overpriced. Put another way, their Price may not reflect the true Value of Arbeit. A similar problem may occur where the Quality of Arbeit may become distorted by having a higher or lower than usual Value. It is true that this can happen from fluctuations between depreciation (the Attrition Rate) and appreciation (the Inaction Rate). However, the distortions may even occur from sudden, unexpected changes in the contributions of Arbeit and its subsequent conversion into Geld. Wars, natural disasters, pandemics and political instability will cause this but there are also mundane, peacetime causes. 

Since the Work-Standard has pegged Currencies relying on a Fixed Exchange Rate, one possible cause during peacetime is a trade imbalance, an important topic among SMP Compendium entries concerning international trade. “Devaluation,” unlike Currency Depreciation, does not stem from a rising Attrition Rate. It instead involves the Central Bank deliberately reducing the Price of Geld by reducing the Value of Arbeit. The Intent is to secure cheaper exports and expensive imports within Exchange Rates. This causes the purchasing power of the Currency to weaken, requiring more amounts of Geld to convert into another Currency.

Another consideration are preexisting conditions within the nation-state that cause people to emigrate abroad. It too is another topic related to international trade, except it pertains to the ability of the nation to contribute Arbeit into the Life-Energy Reserve. A related variation pertains to demographic decline, growing unproductivity, tax liabilities, spiralling Schuld, deindustrialization, and austerity spending. Granted, the roots of those problems can be traced back to Kapital becoming increasingly abstract since the death of Bretton Woods, but entire nations have spent years and even decades languishing from their effects. Even so, these problems have plagued the Western world in the decades since the death of Bretton Woods.       

The problem of high emigration is just one half of the problem of high immigration. Far from being a “Right-Wing talking point,” the issues pertaining to uncontrolled immigration and emigration in the Western world are economically and financially motivated. People from outside the Western world do not voluntarily choose to emigrate to the West because they adore its cultural, traditional and historical legacy and wish to contribute through their own presence and actions. Rather, they emigrate to the West because life in their own nations has become increasingly unstable and chaotic. The world after 1945 may be experiencing fewer conventional wars, but the rates of terrorism, civil wars, political-economic instability and revolutions have grown considerably. They are willing to endure ‘menial jobs’ because the Kapital in the West is worth far more than the Kapital their families earn in their ancestral homelands. Thus, as one nation expropriates the talent and expertise of a whole generation from another nation, all of the “Right-Wing” appeals to anti-immigration become acceptable to casual observers.

The roots of those problems are a consequence of Free Trade, particularly the free movement of Labor and Kapital, being aided and abetted by the same Globalization that grew up in the wake of the death of Bretton Woods. For the Socialist nation-state, the State must control immigration and emigration across its borders. The decision to live abroad has to be a political, cultural, ancestral social and historical matter, not an economic or financial one. If this cannot be tackled, there is a chance for the Total Economic Potential of the nation-state to slowly, but steadily decline. And as long as those issues persist, the Central Bank of the Socialist Financial Regime may be compelled into devaluing. The justification for this has to do with an increasing lack of Synchronicity between the contribution of Arbeit and the creation of Geld. If the amount of Geld in circulation exceeds the Value of the Total Economic Potential Rate, the Central Bank will devalue the Currency to reset the balance between Arbeit and Geld. 

The opposite of Devaluation is “Revaluation.” Unlike Appreciation, Revaluation does not occur from an increase in the Inaction Rate. It arises when the Central Bank of the Socialist nation-state decides to increase the Price of its Geld by increasing the Value of Arbeit within Exchange Rates. Less Geld will be needed for conversions into another Currency, whereas the other Currency has to spend more for less Geld. The Intent of this decision varies, as it happens less often than with Devaluation.

For Liberal Capitalism, Revaluation occurs whenever there are perceived changes to the competitiveness of a national economy relying on the affected Currency. It can be caused by alterations to the Interest Rate just as it could also be influenced by electoral outcomes within a Parliamentary Democracy. Another cause is Speculation, particularly in instances where the Financial Markets are uncertain of whether certain political decisions will affect the returns on Kapital. 

For Socialism, Revaluation can be conducted as part of a reform to national monetary policies. This may be done to increase imports and lower exports, a problem which inflicted trading deficits against the Soviets and Eastern Bloc between the 1960s and 1970s. Another, albeit similar possibility, is to make it easier for foreigners to export goods and services to the Socialist nation. It is usually justified on the basis of achieving a more balanced Exchange Rate. 

The Work-Standard operates under a similar, but distinct, set of parameters. Striking a proper balance between Devaluation and Revaluation is crucial within international trade. They are integral to ascertaining the Balances of Trades and Payments that govern the Real Trade Agreements of the Work-Standard. However, there will be pressures compelling a Central Bank to opt for either. 
Always remember that the overriding factor behind the decision-making of the Central Bank is the Arbeit in the Life-Energy Reserve. What this means is that the dynamics of Devaluation and Revaluation are applied counterintuitively but nevertheless operate under a familiar logic. In short, a Devaluation of Geld is also a Devaluation of Arbeit and a Revaluation of Geld is also a Revaluation of Arbeit. These peculiarities will be explored in the second half of this SMP Compendium entry.

Categories: Compendium, Politics, War

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