Lifestyle Options, Economic Growth and Employment

All types of economic activities on this planet, directly and indirectly and even remotely, pave way for the ultimate lifestyle options of its people living in it. The activities may range in myriad ways yet essentially its main aim is to foster more comfortable and easier lifestyle options of the people. These economic activities are of numerous types and they are all to a significantly large extent supported by firms that are associated with one or more supply chain activities that are based in a region, country, continent or the whole world. This would mean that the economic activities, employment and growth of a region, country or the world would greatly depend upon the vibrant activities of its supply chain and the resulting increase in its inventories and increase in capacities. However, economic growth alone and the increase in capacities need not necessarily translate into job opportunities and increase in employment.

It is for the reason of employment alone that a more evolved and comprehensive study must be made in the light of the activities that take place in a nation in particular the supply chain activities. As jobs are the essential driving forces for any economy and for its people to pave way for more positive goals and better lifestyle options it is mandatory on the part of the authorities or the governments to understand the functions of the different supply chain activities of an economy.

It is of utmost importance that the financial market rather than act independently support these supply chain for a more sustainable economic growth and future of the citizens. Again, this also would mean that the financial institutions are more compatible to the activities of the supply chains both for the existing ones and also the newly added ones.

Expansion and Contraction of Supply Chains

Expansion of supply chains occur when there is growth in overall economic activities of a country and contraction of supply chain occurs when there is a fall in the economic activities. Firms within the supply chains expand and become profitable due to the vibrant growth of the economy and there is rise in GDP. The reverse is the case when the GDP growth rates falls.

In the former case most firms expand and are profitable even if there is competition from other similar or more or less similar supply chains. Few however, may operate with just marginal profits without putting in any extra efforts or making use of technology. The rest will be making high to abnormal profits and resort to expansion setting in a chain of expansionist efforts within the whole of supply chain activity. Firms supplying to more than one supply chains will be reaping in extraordinary profits. There will be increased entry of newer firms too for increasing capacities. There will be constant increase in employment and newer and challenging employment opportunities. Lifestyle options for the people in general will be several. This in turn may lead to growth of even newer supply chain activities.

In the case of slight fall in economic growth most firms will have difficulties in making profits and may resort to less expansionary trends even though some may still adopt capacity expansion and put in extra efforts at marketing. Very few and quite insignificant firms may suffer loss or just about remain operational with no profit or loss due to less efforts being made to change the style of functioning and not being receptive to technological improvements.  There will be sluggishness in employment generation and opportunities and this may vary from firms to firms. Some firms may exit due to idle capacities. Lifestyle options of the people will remain as it is without any significant shift towards improvement.

In the case of sharp fall in economic activities or negative growth a significantly large number of firms will be affected by it. These firms will contract their activities due to low demand and there will be larger unutilized capacities for most firms operating within the supply chain. Most firms will suffer loss and many under undue pressure from market conditions and low demand may even close down business. The overall supply chain will shrink and so also the contraction of the lifestyle option of the people in general and so too employment. In fact, unemployment will rise up horribly so as to create social unrest. There will be far less opportunities for newer careers for job seekers.

From the above we can gather that there is a strong interrelationship between the economic variables namely the level of output of goods and services, financial support and providing liquidity, employment and the growth of the economy. Here, financial support is not just a service like any other service, but is a separate entity to highlight its importance as well as to demarcate it separately. In fact it serves to identify and monitor all funding, provisioning, updating, segregations of funds into specific channels, subsidies, anomalies resulting out of monetary misuse and the overall influence it exerts on all the supply chain activities of the economy.

The above factors are real economy variables and the monetary system is part of the whole economy that gives active support to the real economy. This means that the real economy is the achiever and the financial economy is the facilitator where the real economy has to be kept a few stages above or at par for easy liquidity in the overall economic system.

Studying the supply chain activities within an economy and analyzing each of their performance is mandatory to introduce remedy into the system during times of downturn and shortfalls faced by the system for smoother functioning of the whole supply chain. In order to study the supply chains it is also imperative to learn the types of supply chain that exists in an economy and the reasons behind their existence for the growth of a country’s GDP and direct influence it exerts in employment.

Types of Supply Chains in an Economy

There are few types of supply chain activities that dominate in playing an important role in increasing employment in the real economy and growth of a country’s GDP. Identifying these supply chains is also important from the point of governance of the country’s economy. The government would know the actual numbers of such supply chain activities and the categories they each belong to. It is by ascertaining the statistical data of each category of supply chain that a proper decision can be made as to how to improve, disengage, invent and repair such chains as well as providing impetus to other facilitating supply chains so that unemployment can be addressed and improvements can be made. Proper laws, rules and regulations and taxation both direct and indirect, form the immediate tools for addressing the unemployment and growth problem in these supply chains. The supply chains are of the following types.

Growth Oriented Supply Chains:

These are supply chain activities which are in a growing stage mainly due to a robust economy or because of a ground breaking technology paving way for a spurt of business activities with firms joining in the race either expanding from other supply chains or sprouting as fresh starters for making the most out of the vast scope provided by the new area of economic activity. One may see several instances of such new supply chain activities and this is especially so in the case when new set of industries starts to grow and invest in newer types of business activities like the mobile telephony, health care, a revolutionary product, newer types of energy sources and so on. Education and growth of knowledge forms one of the significant areas of improving the growth stages of this supply chain and linking with the rest of the economic activities of a country. In fact, the education and knowledge institutions are by themselves supply chain activities that run corollary to this main supply chain and so also other supply chains. The same holds true with financial institutions and their supply chain activities that give support to firms belonging to any of these and other supply chain activities. As stated earlier it is the real economy that acts to achieve the increasing growth rate of the economy and employment while the financial sector acts to facilitate that objective and so also education and all these acts together to give the stable numbers towards growth of GDP. There will be further need to create liquidity within the economic system due to such high growth. There will be wide range of lifestyle options for the people in general.

Receding Supply Chains:

These are supply chain activities within an economy when there is stiff competition due to which the firms in these particular supply chains start to recede slowly. These may occur when the firms are subjected to cheaper products due to change in technology or through imports. There may be unemployment but also sudden displacement of labors that would need to be accommodated in other supply chains or given special training and new skills to compete for new jobs. The firms here may not recede into oblivion, but may start off with several adjustments and maneuvering in order to regain their lost grounds. The displacement of labor in such cases may be only a temporary phenomenon. There will be increased unutilized capacities within firms in this chain which some firms may try to rectify.  The lifestyle options of the people may not change significantly due to this as they can depend upon other supply chains. Liquidity within an economic system may not be affected significantly.

Contracting Supply Chains:

These, unlike receding supply chains, mainly occur due to sudden introduction of improved or ground breaking technologies in other supply chains. The firms within this chain starts to contract and may not loose out overnight yet they manage to remain within their niche market with fewer customers who are die hard supporters of their products or services. They may remain so for long stretch of time yet wouldn’t be able to regain their lost glory. They may be just profitable or existing under no loss or profit basis. Some firms may even start to supply to competitive supply chains with improved technology while still retaining the product supply to their original supply chain. There may be displacement of labor due to job loss resulting out of shrinkage in overall capacity.  Further, newer supply chains with high technological inputs may not retain as many numbers of employees as the older supply chains. In fact, there will be shortage of general jobs while on the other hand there will be heavy demand for specialists. Lifestyle options for the people are generally affected in this case. There will be severe unemployment in the society in such case too. Identifying such supply chains may become necessary in order to get some sort of support from the government. There will be excess liquidity in the system which would need to be addressed.

Vanishing Supply Chains:

These are supply chain activities which are either phased out of the market or have to go off on their own due to severe pressure from the society and the government. They may or may not face any competition and may have remained at the zenith of their profitability, but for the action against them which may become mandatory so that they sooner or later have to exit the scene. A few good examples are of the tobacco industry and also that of drugs (legal or illegal), specialized arms and ammunition and others. A good deal of labor force may get displaced in the short to long run and may have to look for jobs in totally different types of firms within other supply chains. Here, new skills and training are of utmost importance in order that they may get equal opportunities elsewhere. There will be severe unemployment and life style options of the people will be forced to change significantly. Yet these supply chains may have to be phased out due to problems that the society may have to face in near or long terms. There will be excess liquidity within the system as there may not be adequate asset backing to support it due to the phasing out such supply chains.

Cultural and Religious Supply Chains:

These supply chains exists out of the need to preserve the society’s heritage which has roots in the past cultural and religious activities. They may be unique to a country and differ in smaller to larger extent and in some countries they have formed deep roots so as to be a significant part of the overall economic activity. In other words, these include all activities like mass spiritualism, mass congregations, celebrations, cultural and religious events, spiritual practices, charity, products and services and finance arranged and distributed for furthering the cultural or religious event and so on. In fact, these are all viable economic supply chain activities that may add to the GDP in less or more ways. It is for the government to take a decision whether to bring these supply chains under the ambit of law and taxation or not. Even if they are allowed to remain separate from other economic activities they are almost parallel activity and may bring about a second economy if not integrated with the main stream economic activities. They also affect the profitability of the mainstream commercial supply chain activities. This is the actual interpretation in terms of economic activities and it is for the government or the society to make improvements to bring about further integration with the mainstream economy lest a second economy comes into being threatening the actual economy. Lifestyle changes may or may not be significantly felt and employment potential improves and decreases with changing season and the inherent strength of these supply chain activities. These particular supply chains can be both a store of wealth earned from the interaction with the mainstream economy and a hub for expenses on promotional and publicity grounds. It is also seen that though a dozen people may be spiritualistic or culturally driven for selfless non profit seeking motives yet if more people than these numbers are involved then it becomes an economically viable supply chain activity.

Creating and Inventing New Supply Chains:

When there is downturn in the economy and there is low investment in the country resulting in widespread unemployment, it is mandatory on part of the government to encourage investments in all sectors. However, such investments may or may not yield the required results if the existing supply chains are under pressure to perform like the above and therefore there is need to analyze the existing supply chains and any potential for future growth. In this context the government of the country would necessitate steps to bring about newer types of supply chain activities that overtime would serve the society positively and paving way for the newer life style option for the people. Even in case where the economy is in upswing the government of a country may contemplate upon the idea of introducing a new supply chain activity so as to boost the existing economic growth, employment including allocation of human resources for more self fulfilling career and challenging areas of job opportunities as well as to absorb the excess liquidity from the system by providing essential equity base support for the currency in circulation. Larger the supply chains the greater will be the need to introduce more liquidity into the economic system. Here, while introducing the newly invented or created supply chain activity there will be equal participation in the process from the private sector and this needn’t be confined to the government only. Here, the government would play as the regulator and the initial investor while the private players would move in tandem within the supply chain to make it a success.

Most of these created and invented supply chain activities may have been introduced with some deliberate thinking and brainstorming by participants that are from the government, industries, individual entrepreneurs, social experts, scientists, scholars and thinkers. A good example of such a supply chain is possible if space tourism is given a boost. Here, an entire lot of industries, firms, suppliers, technologists, and medical services, insurance and so on may sprout up giving enormous support to the activity. Here, just sending passengers frequently to space a few meters above the stratosphere is sufficient to set in chain of unprecedented economic activity. Initially, the space tourism may work out something like the a staged drama much like the roller coaster rides tourists take in a theme park, but over a period of time this may lead to more sustainable and ambitious projects and programs. Once, the space is manned commerce and other opportunities will automatically follow including human needs and thus enhancing the life style option of the people.

Similarly too, is the case with under sea tourism and under water hospitality centers that again can set off a range of supply chain activities. The above are to serve as examples and this needn’t be restricted to these areas only. It is for the society and the people to understand the need to create and invent newer supply chain activities to give the right type of positive spirit and nourishment to the evolving human race.

Once, people set out on such journeys there will be problems and hurdles which will necessitate newer types of supply chain activities to address these difficulties. There will be huge employment potential for the economy and life style option of the people will change drastically. There will be multifold growth in GDP too.

Some of the down to earth new potentially significant invented supply chain activities that may be invented could be compulsory pollution control in industries, waste renewal and management throughout the country and others which experts may think out to be quite positive for the overall well being of humanity.

Currency Volatility, Speculators Instincts with respect to Developed, Emerging and Under Developed Economies

Currency Volatility, Speculators Instincts with respect to Developed, Emerging and Under Developed Economies

There is a general belief all over the world that QE or Quantitative Easing may slowly be withdrawn. This in other means would mean that tapering would soon be announced. When we talk of QE, we mean only the US dollar and tapering means that the dollar printing would be slowly reduced stage by stage. However, to refresh everybody’s memories QE is happening in several other developed countries passing through difficult economic depression. This includes Japan which has its yen printing and so does Euro. There is of course political implication of this as many countries still do not have much idea as to what is happening yet for the moment we here shall talk about the economic angle only.

Now the question here is whether the QE is evil or good? The answer is quite simple and that is it is both an evil and a boon. It is the perspective which we try to look at it and the resulting way that it is being done that makes it either good or bad.

To start with this theory suggests that the QE (US Dollar) will not end any time soon, but may extend into the far future too if there is larger perspective to it in terms of taking responsibilities or challenges.
In sharp contrast if it is only for some temporary adjusting mechanism then tapering is the only way out.  If former is the case then there will be some reduction in bond buying and not a full stop of it. What we all might see is a manipulation on the QE and nothing whatsoever to stop it. In the latter case there will be slow tapering that will end the flood of money in the world currency market. Isn’t this unconventional and absurd? It shouldn’t be so if you were to look at the whole of the world economy in the right perspective. Had it been only for a single country perspective then the whole thing is absurd and unconventional. Yet when the whole world at large is intricately involved the process attains a different status altogether.

What is QE?

To begin with QE is releasing certain quantity of money into the system. Now you may ask which system? If it is the US economic system then there is great danger as sooner or later the financial system will collapse on its own hollowness of not having enough equity or asset backing to support the excess flow of dollar into the market. Here, it will be subjected to the theory of ‘emasculation and escalation of near money instruments’ as I had written earlier.  

Then into which system is the Quantitative Easing being carried out? Of course, into the world economic system and herein lies its obvious stability factor. Both the US bond and the US dollar are at hardly at risk when the same is connected with the world economic system and not the US system alone. It must be borne in mind that the domestic stories of the emerging economies and under developed economies are still there to be written. The actual process of development may vary and could be carried out within a few years or longer according to the policies of the government of these countries. Even in the case of closed economies too the potential to develop within the domestic front is immense and sooner or later they will have to open up. Theirs is, as a matter of fact, raw economic stories yet to be written.  

This also means that the US economic cycle is relatively weak with that of the present world’s economic cycle and more so with that of the future world economic cycle. However, by merging the former with that of the latter the US economic cycle would stand to gain although the world economic cycle would be under pressure.  It would also mean that tapering of the liquidity easing would have to start if the developing or emerging economies show visible signs of low growth or going back to recession. This is because the actual value of dollar in relation to the equity base support received from emerging economies would start to fall. The only way for the dollar value to regain strength in relation to global economy is by reducing money printing in such cases or by exerting maximum dollar strength to prop up the sliding economies around the world rather than simply allow asset prices to shoot up. If the QE or tapering mechanism is not properly carried out then valuation of dollar in relation to the world economic cycle would remain extremely stressed.

So the best way for the US dollar to stabilize with adequate equity based support is to hang on to the domestic stories of the emerging and undeveloped markets. This obviously brings about the much needed stability for the US currency and the same is only subject to pressure when tapering is announced. Hence, from the point of view of US there is nothing wrong with hitch riding on other economies when whatever little improvement is noticed in USA is hardly inspiring from an economical point of view. Further there is no need to dismiss the fact that there is an obvious addition to the overall US economy through the newly arising trade relations due to the increased leverage of the dollar as the world’s unofficial reserve currency.

This can be stated in another way and that is the world at the moment is seeing a scenario that is as much a reality as it may ever be. And this if explained economically is that through the influx of dollars into the world’s economic systems, the emerging economies and undeveloped economies are actually purchasing US dollars by providing sealed bonds to the FED. Why is it so? It must be remembered that the major dollar flow has been invested for investments in the emerging economies and is being speculated with that of other currencies.

Hence, for the moment the US dollar will not be under much pressure due to lack of asset or equity backing, and will only be subjected to the theory of emasculation and escalation of near money instruments in relation to the business cycle of the world economy. It is to be noted as earlier stated all these speculations are carried out with biasness to the predominant currency.

Emerging scenario of business cycles

The business cycle of the world economy is far better than the business cycle of US economy and when the latter merges with the world economy with a reserve currency printed unilaterally it exerts a tremendous pressure and influences on the economies around the world. How does this affect the overall position of the world economy with the steady flow of US dollar into the world financial system? It affects greatly the world financial system with uncertainty as to whether the value of dollar will remain stable in the long run or whether it may adversely affect the emerging economies actual asset values. In short, when there is steady increase in the flow of dollar into these countries it will greatly increase the value of select assets through the principle of hedging or call it risk parking on all dollar purchases.

This would inevitably corner the domestic investors in these economies to pause investing or to forego taking risks by purchasing assets whose prices have already been greatly inflated by foreign investors. Contrary to popular perception,   as they say that volatility happens mainly due to the fact that tapering will be announced or not and that the dollar will inch up slowly when the US economy improves, but far from that and this means that the volatility happens due to the fact that there is an imperceptible and intuitive feeling among investors and speculators whether the dollar tries to legitimately achieve the status of world reserve currency visa vis other currencies or not.

Then where is the actual problem? The problem lies in larger than unimaginable financial bubble burst which no one would ever have anticipated and which may begin to unfold. In fact, the human population is already well entrenched in a swelling financial bubble. How is it possible? In order to understand this perplex question it is better to get to know something about currency speculators instinct and speculators nuances in course of trading with foreign currencies.

Speculators instincts

Speculators speculate in currency market to make a windfall profit. They wouldn’t speculate if there is no profit mostly in near terms. If the speculators speculate in currencies by positioning themselves for a long run or long term potential gain, then they are not speculating, but have changed their course to investing. It is to be noted that speculators may or may not be aware of their own instincts while speculating in foreign currencies, but readily pour their efforts to speculate with that basic instinct by ascertaining various scenarios including political, economical, social, business and financial information. The speculators do this intuitively after getting the nuances that each sudden occasion and events may demand from them a motive to reason out a quick profitable move.

From the above we can reason that the speculators all speculate in foreign currencies if the financial environment is liberal enough and the currencies are partially or wholly convertible. If the currency is not convertible then there is no reason why the speculators should take any position as there wouldn’t be any windfall profit. Again, speculators will carry out speculation on a daily basis so as to bring about the much needed liquidity in the currency market as well as make it easy to ascertain the real value of one currency with that of another.

But do all speculators make profits? Surely not, for just as many of them make profits so does as many speculators make losses too. However, this is not important from the point of view as the total acts of the speculators bring about the much needed currency stability in the international market. This means it is not necessary for all intuitive speculation in foreign currency by all individual speculators should end in a profit. It means that the sum of their collective strength from individual speculative efforts, including the reduction of losses from their profits, is much more than the total derived out of each of their individually nuanced or intuitive based speculative position.

The above factor gives the currency market its required stability with speculators speculating on currencies with a larger percentage of them putting their efforts with a definite bias on the strength and weakness of the reserve currency. Here, in this case it will be the US dollar and in all other cases speculation will be carried out, where there is absence of US dollar, with a definite bias on the next full convertible superior currency. A superior currency is one through which most of international transactions and trade can be carried out if not fully.

The reason for this bias while speculating is noteworthy and important as it is seen that all currency speculators would in one way or the other ultimately revert back major part of their income and profits into the full convertible superior currency and not in the other currencies. This biasness will prevail in every foreign exchange transactions unless all other economies are vibrant economically with fully convertible currencies. Again, any currency which is not fully convertible and that is speculated in open international market suffers from the ‘factor of being naturally disadvantaged’.

Governments as Speculators or moderators

Unlike the foreign currency market speculators, the governments of some countries may turn speculators to make some profits either directly or through proxies or otherwise they may turn to regulating the market in one way or the other and therefore simmer or make bitter the volatility that exists in currencies.

In recent times the group of 20 nations had agreed to swap currencies and there have been results although you actually need to settle the swapped currencies some time in the future with interests as agreed upon. This is one arrangement. This is usually resorted to when there is unbridled announcement of tapering by the FED. This cannot be so as the US dollar has not attained the actual status of the world currency and any tapering must be done with prior consultation of all countries. There is a lot of confusion here which actually results in currency volatility and speculators make the best out of it.

The decisions taken by governments and regulators make sure that the domestic currencies caught in the undercurrent volatility remains stable with that of the speculator’s biased foreign currency in terms of fluctuation in value. This may bear fruit or may not and totally depends upon the powerful speculators of the foreign exchange market. It must be noted that these powerful speculators are not just individual or small organization, but are huge multinational giants with trillion dollars in assets, financial giants including banks and huge corporations who have sizeable account and activities in speculation all over the world much more than their real business. As a matter of fact, these corporations make major percentage of their profits through currency speculation and not through their manufactured products which if at all is only a small percentage amount of their balance sheet.

There are tiny countries that speculate through proxies or by themselves in order to reap profits and in the end one sees there is an ever greater churning of financial instruments and currencies backed by even lesser and lesser equity based support for these. This creates a bubble and presently the whole world is sitting on it.

However, unknown to most parts of the world the notion that volatility can be curtailed with regulating mechanism like purchasing and selling off dollars, the fact is that huge volatility with apparent biasness towards a predominant currency can be rocked or burst with sudden infusion of that predominant currency into the international market by a government.  For instance, there is huge volatility of the world reserve currency where a lot of speculators have taken position. Then if all on a sudden there is a sudden dumping of sizeable reserve currency on a single day then financial mayhem will occur. For example if there is hot speculation in the international market and the dollar is rising high in relation to other currencies and if large speculators take up position then a government wanting to tame the rise of the dollar can dump around 30 to 50 billion dollars on a single day without a pre-warning.  This happens because in spite of huge liquid cash with some large speculators they actually put in only a percentage of their cash in speculation and thus wouldn’t be able to square their position in case if a country’s government dumps a large amount of their reserve foreign exchange fund in a single day.  Of course there must be sizeable reserve for a government to do so and this reserve may get build up slowly and steadily as we shall see in the discussion below.

In the above case it is seen that the outcome of such dumping can be immense. In such case the sum of the collective individual nuanced speculative positions of different speculators will be far less than that of the total of each of their individual speculative position after deducting the losses from profits. Therefore, the foreign exchange market will experience huge volatility and total crisis.

Here, in the above instances too the governments may try to regulate volatility of the domestic currency with that of the predominant currency. This will however be dangerous for the international financial market. The precautions which the predominant countries may take are to keep their own financial institutions and large corporations indulging in such large speculation in strict lease through frequent audit and other stringent rules and regulations.

A more complete picture will emerge after studying the 9 stages of speculative attempts of a currency with that of other currencies. Although the speculators tend to exercise their intuitive nuances they may not have the actual reason as to why they are taking such a course.  It is also quite mandatory that speculators must speculate to derive at the right valuations of currencies in all free market systems and they play a very significant role in maintaining the actual market value of the currency. This can be explained with the help of a diagram. It is to be noted that the stages of QE is not the stages when money is realized by FED or any other Central Bank of a country, but the stages of intuitive perception that speculators make when speculating.

1^st Stage of QEs in relation to the other world currencies and speculators instincts

The economy of the predominant currency is strong in the eyes of the speculators. The currency will be traded freely with an overwhelming bias to the predominant currency.

2^nd Stage of QE

The biased currency will still be strong enough and the liquidity easing may make it flexible will not generate any difference as was the case with Stage 1. The speculators will not sense anything and will continue trading with a bias to the predominant currency.

3^rd Stage of QE

The huge liquidity in the world economic system may be slightly disquieting with speculators simply frowning only and still carrying out their speculation with a definite bias towards the predominant currency.

4^th Stage of QE perception

The speculators will begin to doubt the long term viability of the predominant currency and speculators may still think that there will be reversal of this flow sooner or later. Speculation will not be so biased towards the predominant currency.

5^th Stage of Liquidity perception by the speculators

There will be firmer belief among speculators that something else in happening on the screen and that there may be a delay in the reversal of the liquidity into the world economic system.  There will no more any biasness to the predominant currency and some speculators may actually turn investors in equity in other countries other than the country of origin of liquidity. There will be pressure on rating agencies not to downgrade as the predominant currency is invested in these countries and therefore the mathematics do not balance or work out well. This will also be the stage when other countries slowly and steadily increase their stock of the predominant currency with their Central Bank.

6^th Stage

The belief in continued liquidity gains momentum among speculators and their intuitive nuances say that the predominant currency is turning into legalized World Reserve Currency or in the process of being so. Governments of other countries will exercise political and economic options to stem the marginalization of their own domestic currencies with that of the predominant currency. Many countries with very weak currency may undergo a process of intense marginalization coupled with weak economy and the predominant currency will set pace to become the acceptable legal medium in these countries. Weak currencies will slowly give way to the predominant currency as its own dominant currency.

There will be initial advantage to such weak economies especially in relation to imports and this would only be sustained through continued economic reforms. There may be similar liquidity easing by more than one currency and countries and thus creating severe economic delirium.

7^th Stage

This will be as stage of political friction and volatility of currencies and speculators will heavily speculate against all odds without bias due to this period of uncertainty.

8^th Stage

There will be lack of official clarity or international clarity as to the legal status of the predominant currency or currencies. The currency will never be accepted in this form as it being issued by a single country unilaterally or one or two countries in unison. A currency with the approval of the majority members of the UNO will only be accepted. Hence, the stage is set for more speculative activity without any bias whatsoever. This uncertainty may ruin the world economy if no agreement is reached. This will be the stage when governments may dump huge amounts of the predominant currency they are holding as stocks and at the same time accumulating the same currency stealthily and steadily. If no agreement is reached then this will set the stage for the heavy devaluation of the predominant currency with speculators turning their biasness to those of other weaker or prominent currencies.

9^th Stage of liquidity easing in relation to speculator’s perception

The final stage will be for resolution from the political angle only with countries trying or not to reach an agreement.