As there is currently considerable concern about changes relating to visa income and deposit, I thought a chart showing how the cost of 800,000 Baht has changed in USD since 2001 would make for an interesting starting point.
What should really make people sit up and take note from this chart is the impact of the Bush 43 tax cuts on the USD/THB rate from 2001 to 2008 – it should be noted that this movement was not specific to the USD/THB rate, it broadly reflected the movement of the US Dollar Index over the same period of time.
The Bush tax cuts (and other economic illiteracy) increased the average annual cost of 800,000 THB from 18,067 USD in 2001 to 24,139 USD in 2008, an increase of 25.15%.
It is a lesson from history that far too many, despite all the evidence that history has provided, are wilfully ignoring.
Bearing in mind the impact of the Bush 43 tax cuts shown above, members with an income from a USD asset base (social security, investments etc) should be deeply concerned about the long term impact that the latest tax cuts package (which became operational on 1st January 2018) will have on the USD/THB rate.
While the details are quite different, broadly speaking, the latest tax cuts package was constructed (as with the Bush 43 tax cuts) to benefit major US Corporates, Wall Street and the 0.1% and the overall impact on the US economy will be similar in nature – the tax cuts package has set a marked fall in the value of the USD in tablets of stone.
Any illusions that the impact of the latest tax cuts package would be different to the impact of the Bush 43 tax cuts should have been quickly dispelled once it became obvious that after the tax cuts package was passed, behaviourally, nothing has materially changed with the Corporates, with Wall Street and with the 0.1% since the Bush 43 years - overwhelmingly they looked after themselves with stock buy backs etc while doing precious little for jobs and employees.
Confirmation that the benefits were overwhelmingly going to corporates, Wall Street and the 0.1% can easily be deduced from the absence of the tax cuts package from the 2018 GOP midterm election propaganda
The chart below of the annual average USD/THB rate shows the actual movement from 2001 to date and a projection that (ceteris paribus) shows the probable impact of the latest tax cuts package.
My projection is based on the impact of the tax package on the annual US budget deficit, US long term debt and the financing costs of that deficit/debt – while it’s not exactly rocket science for those who are willing to learn the lessons of history it may be a major struggle for those with wilfull or highly selective amnesia.
Should my projection prove to be correct, the cost of 800,000 Baht by 2024 at a USD/THB rate of 25 will have risen to 32,000 USD.
One possible mitigating factor I have not included in the projection of the USD/THB rate is the possibility of a fall in the international value of the THB, this is for two main reasons:
1. Every prediction in recent years of a material fall in the THB has proved to be grossly exagerated.
2. I doubt that the combined intellects of Isaac Newton and John Maynard Keynes would have been able to produce a theory of gravitational economics which could encompass the gravity defying properties of the THB (and I am way out of their league).
Nut warning: Please note that the contents above contain actual facts and projections based on factual history which may not be suitable for the kind of nuts on UM that are afflicted with severe repetitive factual digestion problems.