Measure inspired by 1995 episode of ‘The Simpsons’
Here’s an upside-down approach to monetary stimulus.
A petition to change the name of Australia’s currency from the Australian dollar to the “Dollarydoo” has received more than 50,000 signatures since it was posted late last week.
”Dollarydoos” is a reference to a 1995 episode of the show “The Simpsons.” The petitioner, who identifies himself on Change.org as an Australian named Thomas Probst, argues that the new name would stimulate the economy by creating demand for the country’s currency.
“This will make millions of people around the world want to get their hands on some Australian currency due to the real-life Simpsons reference, driving up the value of the Australian currency,” the petition’s author writes.
Watch the clip from “The Simpsons” episode below:
But why would a stronger currency lead to stronger economic growth?
The petition is clearly a novelty, but what’s interesting is that the economic argument on which it is based — that a stronger currency would boost growth—is the opposite of how central bankers go about attempting to stimulate an economy via exchange rates.
Policy makers at the Reserve Bank of Australia spent most of 2015 trying to weaken the currency by cutting the central bank’s benchmark interest-rate target, and suggesting in public speeches that more cuts could be ahead. They last reduced the country’s benchmark-rate target in May, lowering it by 25 basis points to 2% and causing the Aussie to weaken.
A weaker currency is expected to stimulate economic growth by making exports cheaper to foreign buyers.
The Aussie — as the country’s currency is commonly known — has shed 17% of its value against the U.S. dollar over the past year as falling industrial-commodity prices and slowing demand from China have rattled the country’s mining-dependent economy.
China is Australia’s largest trading partner, buying 33.7% of its exports, according to the CIA World Factbook. Australia’s three largest exports are coal, iron ore and gold.
The Aussie AUDUSD, -1.0576% , as its more commonly known, recently traded at 72.60 cents, slightly above its weakest level since March 2009, which it reached in September.