FX macroeconomics
product network return-paths will encounter currency borders. Ideally, the value exchange at a border will be unchanged except divided differently: €1.288 for £1.00 or ¥112.905 for $1.00 and so on. Further, currency transaction needn’t travel along the same paths as the production path; currency transaction may find its own efficient path back to the source of the invested capital. At the point of assembly, each of the product’s individual
components stored in
inventory has its own product network stretching back to its point of origin and its currency regimes. As value flows back,
it encounters
Part II: Economy of No Nation
Consider the purchase of a something complex, say some electronics device. Instructions are provided in an eye straining bevy of writing systems: Latin, Cyrillic, Arabic, Devanagari, Hebrew, Abugida, Kanji, Hanzi and Chữ Nôm.
If one were able to draw a map tracing the device’s assembly, component subassemblies, final product assembly, packaging and distribution along with transportation cost, labor cost, duties, tariffs, taxes and currency translation, all the way up to the point of purchase it would result an extensive network of nodes, paths7
,
branch networks and subnetworks. As long as there’s demand for that
46 FX TRADER MAGAZINE April - June 2016
particular device the product network itself has value. Tis may seem like a stretch, but it’s only another way of looking at the value of a company’s stock. Te value of the network is made tangible by its equity representation in terms of the local currency. Consider the value of the iPhones product network orMercedes S-Class product network. Further, the product network goes beyond components. Consider the complete composition of a product network: a labor force, fixed capital assets, investors, inventory, consumer base, multiple currencies and so on.
Te product is delivered in advance of the purchase. At each step of the way, there’s a deficit. Once purchased, the offsetting transactions flow back in the opposite direction. Te
further subdivisions and rerouted along different paths of branch networks. Taken as a whole, the final product, components, factories, labor, capital source, deficits and credits, branch networks and their entireties, the product network, forms a complete mini-economy. Tis mini-economy crosses borders and does not have a single currency regime.
So far, only one product network is considered. Take into account all production and all services so produced, everywhere. Te aggregate of these mini-economies is extraordinary and unimaginably large8
: automobile, aircraſt, heavy
machinery, drilling equipment, textiles, pharmaceuticals, electronics, appliances, prepackaged food products, cross border transportation, financial services and on and on.
Tis aggregate is not a different view of the global economy. It
is not a collection of national economies and
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95