Apparently, every time a currency falls victim to hyper inflation, sooner or later the country is gonna introduce a new currency to solve the problem.
But how does that help? If let’s say the us dollar lost 90% of it’s value every day, and you introduced a new currency, one of which is equal to 5 us dollars, wouldn’t that new currency, as it’s value is bound to the dollar, instantly lose 90% of it’s value every day as well?
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The reason it’s so hard to learn about inflation is because too many people insist that inflation is cause by something other than printing money. Countries printing money is like stores handing out free gift cards. If a few gift cards were handed out, a profitable store would be able to allow everyone to redeem the gift cards.
Imagine if your local corner store handed out 1 trillion dollars in gift cards. There probably isn’t more than $30,000 worth of stuff in the store and there is no possible way everyone holding gift cards can redeem all of them. This is what inflation is.
Changing currencies is a way of stealing or denying a group of people from redeeming gift cards. Generally, government tries to steal from the richest group. Exchanging currencies would have rules. Let’s say the local corner store changes names and ownership. They allow everyone to exchange up to $100 worth of gift cards over to the new store’s gift cards. Anyone holding more than that is screwed. All the poor people who have little or nothing don’t notice a significant change. The rich are a minority and lose everything. By exchanging currencies, a government steals from everyone who has any meaningful amount of money, and avoids an overthrow of government.
When this happens, no rich people will invest into the country for the next few decades. The country loses their ability to borrow money from any other country.
Changing currencies is a way to default on the money held by all the rich people. That has nothing to do with inflation. IF the country, after defaulting on the prior obligations decides top stop printing more of the new currency, it will actually stop inflation and they will be also freed from a lot of debt. If they continue to print money unconstrained, and the next currency will undergo similar inflation.
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