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?
In: 712
It is all about supply and demand. Cost/value is related to demand. the greater the supply, the less the demand. If a country prints money to solve its problems it is creating supply which lessens demand. On the other hand actual physical items will have a finite supply. if the demand for physical goods is greater than the demand for money then the “cost” of those physical goods will increase. a new currency may help things but it depends on how it is “backed”. For instance some currencies could be exchanged for gold, so you would know they always were based on some “fixed” value. But those would also fluctuate based on the belief that the government could actually make the trades it has promised, and if people don’t believe it, the value drops. The US currency used to be backed by gold by that changed last century. Now it is only backed by “belief”. The same applies to everything. Value is created and destroyed by belief in a thing.
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