What political or economic importance did it have to appreciate the exchange rate of the Gulden T. O. v The euro so low? Does this also apply to the Belgian franc?

Since the end of the oil crisis, we have not actually had any more guilders.

(The crisis of the 80 years with mass-dismissals, immense devaluation real estate and large numbers of unemployed persons)

It was more of a German Mark with our queen on it.

This has to do with the fact that the guilder was linked to the mark, without the link of the strict policy of the federal central Bank in Frankfurt with that of the Nederlandsche Bank in Amsterdam.

This link was logical if you were to see Rotterdam as a forward-looking quay of the ports in the Ruhr area.In addition, the own exchange rate with regard to interest rates was crucial to help the Netherlands economically on top of it (the crisis of the ‘ 80 ‘, with the bottoming of 1982, where the previous credit crunch was slightly pale[1) .

The Germans could only do this at teeth grinding, not only do we hitched on the economic engine of Germany, but we also had an artificial competitive advantage over the Germans[2: It was simply much more advantageous (and More lucrative) to ship German products via Rotterdam than via Bremen or Hamburg.

Footnotes

[1 The crisis in the years 80 compared with current crisis [in 9 graphs

[2 the covert guilder-devaluation

With a cheap Gulden the Euro in also meant that the Dutch prices and wages relatively low the Euro and that the sovereign debt and private debts low the Euro.All in all beneficial for companies that export and debtors including the state and many mortgage lenders.

It was only a short-term advantage because, logically, prices in the Netherlands still adapted to those of neighbouring countries.

An economy can benefit from a low exchange rate because it is in favour of the competitiveness of domestic companies compared to foreign companies.Suppose you have an industry whose cost for 80% is determined by the local wage level and you compare a European with an American company then when a 20% decrease of the Euro T. O. V The US Dollar the European company will have become 16% cheaper Compared to the American company. The European company will therefore be more easily able to increase its market share at the expense of the American company’s market share.

An additional benefit for the Government is that you import inflation: foreign products become more expensive in local currency, which will also increase the domestic price level with delay.As a result, the competitive advantage of its own companies is gradually disappearing against foreign companies, but increased inflation also increases tax revenues. Public expenditure will also increase, but expenditure linked to public debt remains the same: the government that lends 1 billion euros with 1% annual interest will still have to repay only 1 billion and only 10 million interest Have to pay. This will release fiscal space in the drafting of a new public budget and this increases the popularity of the incumbent government. The condition for this effect is that the public debt was entered into in domestic currencies, which was indeed the case for Belgium and the Netherlands.

Dutch economists are generally reasonably agreed that the NLG was undervalued in the EUR.

Even the director of De Nederlandsche Bank reported that already in 2005, including statement:

Guilder ‘ too cheap ‘ exchanged for euro

‘ Gulden went too cheap in euros ‘

I did not know that this was the case, but this could be done to buy power to Herve parts from wealthy (countries) to poor (countries).Because the people with a lot of money suffer a lot, the people with relatively less are better at it and the countries with a more favourable exchange rate also get part of the purchasing power of the Netherlands and Belgium.

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