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I'm not an economist, but on the other hand I don't know that I agree with bywarren on why Belize doesn't dollarize.

Belize effectively has a dollarized economy as the Belize dollar has been pegged to the U.S. dollar for, what, 25 years.

Inflation is a result of too many local dollars chasing goods, but Belize has had low inflation for many years. Ergo, I don't think Belize has been creating money. At least not in any significant amounts.

The World Bank keeps a pretty close eye on Belize.

What the Belize government has done instead is to borrow in the international marketplace, and that's why its external debt is so large (in relative terms.)

--Lan Sluder

Lan, the problem the Belize government has with changing to the US dollar or any other currency that is traded on the world market is that it would have to replace it's currency with that which it is changing to. It would have to obtain enough of the new currency to exchange the Belize dollar that people have for the new currecny. It is "pegged" to US dollar at 2 to 1 only by Belize and in effect you cannot go to the bank and get $1US for $2BZ. That is why the black market exists and in reality the Belize dollar is worth alot less than 50cents US. It would be VERY expensive for the Belize government to acquire the new currency. They just do not have that financial ability and as long as they can continue to avoid changing, they can keep using their Belize money. They much prefer to pay Belizeans with money they say, and only they say, is worth $2BZ to $1US. That is only a reality if someone else will give you $1US for $2BZ. I have yet to find that someone.

PS: as to inflation. The only way Belize is able to falsely represent that it has low or no inflation is because it unilaterally "pegs" the exchange at 2 to 1. The only way to accuratly judge that would be if the Belize dollar was traded on the international market and if that were done it would not trade at 2 to 1 and you would find that the Belize dollar is greatly inflated. The article I refered to that suggests the Belize dollar is worth 3cents US is only one. There are many others that use different formulas to come up with a valuation and they all come up with the Belize dollar being worth A LOT less than 50cents US. None are even close to that value.

PPS: Lan, whenever you come to Belize please look me up and I will gladly exchange your US for BZ at $2BZ for $1US. After all, that is what it's worth, right?

So, bywarren, you're saying that the IMF and World Bank have been totally hoodwinked by Belize?

I agree that if the Belize dollar were allowed to float its value would decline in terms of the U.S. dollar. And I agree that it has no real exchange value outside Belize. And that, at times, the demand for dollars is such in Belize that you can get more than 2 BZ to 1 US.

But those facts in themselves don't mean that the Belize government is printing funny money. Any more than it means that China is removing yuan from circulation (most economists think the yuan is pegged at an artificially low rate to the U.S. dollar to make Chinese exports more competitive.)

A lot of it has to do with the fact that the entire Belize economy, the whole economy, is only about the size of a small town of 30,000 people in the U.S. (on a GDP-equivalent basis). The Belize economy is so small no one in his/her right mind would use the Belize dollar as a store of value and hence the Belize dollar isn't actively traded on world markets. The vast majority of world currencies are actually like that.

Actually, for the last couple of years the Wall Street Journal's weekly report on the value of the U.S. dollar uses not 2 to 1 but less than that, 1.97 to 1, for the Belize dollar.

But I'm out of my depth here -- any economists out there?

--Lan Sluder

HEY bywarren ! Man when you pop up, you pop way up ! Good to see you are still porking. Semper Fi Pal !

OK, Lan: don't get me wrong here. I refer to Belize money as "funny money" mostly because it is only good in Belize. The real delema for Belize in going to another currency that I am trying to describe is how they would acquire the new currency. What would that cost? Can Belize afford the cost? How would they pay for it? Those are the questions that must be answered before the change can happen. I stated that it would be good for Belize to make the change in the long run. I just do not see how the government could do it without bankrupting the country. Although, many feel the country is already bankrupt.

I will go way out on the limb and make my predicition. When Belize finally defaults and admits it is unable to pay it's foreign debt, the US and Britain will bail her out. The US because Belize is too important strategically and Britain because they are ashamed of the way they left the country (that comment is for Peter's benefit). In doing so, they will infuse the money to run the country but will demand that the country be run without the corruption and waste that is present now. Belize will then begin to really prosper.

Semper Fi, Immising. I have a few days at leasure before pheasant season starts. Just could not stay silent. You people have me addicted.

We need Peter's comments, it could get even more interesting. Somebody go and get him.....

When the US government "bails out" a country that would otherwise default on its loans, it is not bailing out the people of that country. Rather it is bailing out international banks, and using money extorted from the US tax payer to do it.
The US should not "bail out" anybody. Let Belize default and let the banks take their medicine. They chose to make loan after loan after loan knowing that the corrupt pols will never pay it back. Let them take the punishment rather than continuing to gouge the US tax payer.
Tax payers are abused enough, thank you!

That is a pretty callous approach Susangg, even for a misguided attorney. The discussion is framed around Belize going to the US dollar. If Belize is unable to exchange the current Belize currency for US dollars at 2 to 1, it will be the Belize people holding Belize dollars that get hurt. If Belize defaults on it's loans (you are probably right as to when not if) then yes, the banks will take a loss. The problem with that is banks get their money from people depositing it in them. Ultimately it is the "tax payer" that gets hurt. I think it was set up that way by attorneys.

Another interesting question. At present Belize is printing new currency to replace the old with the reason given that it will be harder to counterfeit. Do we think, and how will we know, the Belize government will "retire" one old bill for every new bill put into circulation? Hmmm, a tempting opportunity for corrupt politicians.

A final question. Maybe one you are actually qualified to help answer, Susangg.
Why is it that most of these corrupt politicians are attorneys?
:rolleyes:

WHY DONT THE USA JUST GET DI HELL OUTTAH BZ...

[dont get mi started]