There is an abundance of misinformation from even “trusted” sources that we end up building a house of knowledge and conclusions on quicksand. It looks solid but is as weak as water when tested.
For something that is relatively difficult to understand, we are inclined to withhold any sort of judgment until we have enough information to make a rational conclusion. But even then, the press and media—in their desire to simplify things—“damage” the facts in an effort to achieve that simplification. That does a disservice to you and to the world.
You might believe that carbon dioxide emissions released into the atmosphere, and the emissions of other “greenhouse gases” associated with the burning of fossil fuels, like natural gas, crude oil and coal, are harmful to the environment. Then you should be embracing and pushing for the use of the only reliable, cost-effective, and “carbon-free” power-generating source—nuclear.
However, rarely can you find a “carbon environmentalist” in favor of nuclear power. Certainly, there are benefits and disadvantages in any power source. But to hold both the “anti-carbon” and “antinuclear” viewpoints is to try to stand on intellectual quicksand.
Every time the amount of the Philippine Gross International Reserves is published, everyone suddenly becomes an expert on the subject because it seems relatively simple to understand: Foreign currency comes in and foreign currency goes out and what is left over is the GIR. The more the better, right?
Lazy minds read the headlines. The important questions are: What is the foreign currency that is leaving the country being spent for? What is the source of the funds coming into the country?
Simplistically, if you wanted to raise the GIR by $10 billion, go borrow $10 billion from abroad. But that is entirely different from $10 billion remitted into the country to invest and build corporations. Likewise, a $10-billion drop in the GIR to pay off exiting international debt is entirely different than sending out that amount to import video- game consoles.
Another headline for lazy minds is “PHL dollar reserves hit 20-month high in January.” The Philippines’s gross international reserves rose to a 20-month high of $82 billion in January.” The immediate impression is that the government, through the Bangko Sentral ng Pilipinas, has $82 billion stored in the vaults. While the latest currency mix is not readily available, usually the US dollar holdings are about 60 percent of the total. The value in US dollars is only for convenience.
But what happens if the US dollar “dies” because people stop using it for trade? And both Russia and China want to settle crude oil purchases in local currency. What if everyone drops the “petro dollar”?
Again, lazy minds ignore the details. These are the facts: Less than 10 percent of the total global trade comes from oil and oil products. If all oil trading was in local currencies, the effect on the importance of the US dollar will be small. Almost 40 percent of global national debt is denominated in US dollars. In 2017, the banks of Japan, Germany, France and the United Kingdom held more liabilities denominated in dollars than in their own currencies. Ninety percent of the $5.3 trillion currency trading every day is local currency to US dollar.
It is easier to be ignorant. No problem with that. We all like “easy” things. But the danger is that our ignorance can lead to harmful decisions, both public and private.
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