In Short
When a currency becomes less valuable relative to another currency.
Explanation
The value of all currencies (US Dollar, Euro, Pound, etc.) are defined relative to each other. For example: right now one US dollar is worth about .762 Pounds. One pound is worth more than a US dollar. Tomorrow if a US dollar is worth .8 Pounds than the pound has devalued relative to the US dollar. Think of all currencies as items in a big supermarket. If an item devalues relative to the currency you have in your pocket, you can buy more of that item for your money. Think of the bread at the market being marked down in price so you can buy more of it.
Advantages and Disadvantages of Currency Devaluation
Devaluation when it occurs (either naturally or via currency manipulation) has both advantages and disadvantages.
Advantages to the Country Devalued
- It lowers the cost to foreigners of buying domestic goods. If everything is equal, if something is cheaper you buy more of it. If the Pound devalues relative to the US Dollar it becomes cheaper for people with US Dollars to buy British products.
- Lowering costs to foreigners will aid the tourism industry.
- That increase in foreign demand for domestic products causes the companies that make those products to ramp up production. Higher production requires more workers, which means unemployment goes down.
Disadvantages to the Country Devalued
- Importing goods becomes more expensive. Therefore companies that depends on foreign goods for their operations have to raise prices to maintain profit margin. Then domestic companies that depends on the goods of those companies have to raise their prices to maintain profit margin. Then companies who depend on those companies for goods have to raise their prices to maintain margin. The end result is that everything is more expensive to buy.
- It might scare off institutional investors from investing in your country.
- If the country owes money to a foreign country, institution, etc. devaluating currency causes the country to effectively owe more money.
Conclusion
Whether devaluation is a net good or a net bad for a country depends on a multitude of factors such as where they are in the business cycle, the strength of their economy, the unemployment rate, etc.
Fee Structure
| Rate | Assets Under Management |
| 1.44% | Below $125,000 |
| 1.00% | Between $125,000 and $750,000 |
| .85% | Between $750,000 and $1,250,000 |
| .80% | Between $1,250,000 and $1,750,000 |
| .75% | Between $1,750,000 and $2,500,000 |
| .70% | Between $2,500,000 and $3,250,000 |
| .65% | Between $3,250,000 and $4,250,000 |
| .60% | Above $4,250,000 |
A single rate is applied to the entire account. So a person with a $750,000.01 account pays less than a person with a $750,000 account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.
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Questions for the comments
Did my explanation make sense? Do you agree or disagree with what I said?
