Topic: Does Currency Value Falls During Recession? - page 2. (Read 904 times)

As they said it, it is the most liquid asset. Without the push of the government, people will continue to use fiat since it is the natural way of getting their essentials or their necesseities in their lives. You could use bitcoin or other currencies but the easiest one is by paying them fiat. When it comes to taxes, it is already added to it when you buy it, there is no way you could run from it unless it is income taxation of some sorts where the people themselves calculate the taxes they needed to pay.

Bitch please....

It's only a term to say that cash IS the most liquid asset so cash holders can easily do various financial decisions with almost no obstacle (remember that the timing is important):
- Paying debt;
- Buying securities (trading);
- Buying other, currently cheap, assets.

Cash is King because circulation, printing, and demand are controlled by a country..

Countries such as the US & Aussie (CMIIW) are free to print money during a recession because their currencies are used for international transactions, but printing money when a recession will be very dangerous if carried out by countries such as Venezuela, Iran, Indonesia, and several others because their currency does not have the power as used for international transactions (export/import & oil) These countries will only make their countries hyperinflation and then devaluation of their currencies..

Despite the fact that the cryptocurrency market practically originated during the global crisis of past years, one way or another, the economic turmoil of the whole world is negatively reflected in the prices of the cryptocurrency. you can give an example of 2014, when the price of Brent oil fell by 45%, and after that the price of Bitcoin fell by 55%. Of course, today the situation is even more complicated. Nevertheless, Bitcoin is one of the most profitable and sought-after investments that can become an alternative for many businessmen and investors, given the problems due to the pandemic in different sectors of large business. Nevertheless, it is necessary to take into account the fact that cryptocurrency cannot yet be considered a safe haven for storing its capital, since there is still very high volatility.

Cash is king,because it is the most liquid asset(you can turn cash into other assets pretty fast),not because it is considered more valuable than other assets(which is completely wrong).The US dollar decreased in value compared to the euro during the last few weeks,but this has something to do with the anti-racism protests in the USA and it will be temporary.
I don't see any real estate or stock prices going down so far,so cash isn't getting more valuable that it actually is.

Keyword here is FIAT and Im just going off some of what I listened to after 2008 and the vast upset and slides in market values then.     FIAT currency is not a solid currency base ever, the reserves in banks are fractional meaning when a large amount of lending is occurring each bank is receiving currency then lending out maybe upto 10 times that original amount.    The lent out value is then deposited at another bank as cash and again that separate bank will lend out the cash in quantities upto 10x what they originally received.   If banks judge badly they will call on the money lent as a debt, defaults will occur and hence we have a contraction; money returned is less then equal to the original amounts.  When the entire economy pulls back in recession then we get a wave effect and each bank receives less and has less to lend out.
   So your question on what happens to the value of FIAT currency in recession, under natural circumstances a contraction means monetary velocity drops and in effect the available monetary base becomes less.   As we know from supply and demand, if there is less supply available relative to continued demand (people continue to eat, spend, etc) then the value or price generally will appreciate.    FIAT normally rises in value at some point in recession, hence the saying cash is king as you can start to name your price as a valuable cash buyer.

The modern economics we've seen for 20 years has undermined that norm, its harder to say now.  FED recently went out of its way to ensure no contraction occurred, this is funded by debt and only they can produce currency on their own initiative like that really.   Some of us speculate eventually this will collapse as seen in many countries with endless money printing however USD is a global currency, its hard to say when or how even.

If the recession hits 2020, everything will be greatly affected. Especially the economy will be strongly affected. Of course, Bitcoin will also be affected in value. Perhaps the price of Bitcoin will plummet as much as possible. But this will not affect your Bitcoin investment right now.

There is no general reply, that depends on.each currency, how strong it is and what is the shape of economy that is tied too, how much resilient it is. It's more likely to happen in poor, underdeveloped countries but every currency can fall, depending on circumstances.
Also, it depends how deep the crisis is and what each government and central bank do to protect their currency. So it's not an easy answer.

It can depends how hard the recession hits the economy. It could cause a decrease or cause an increase when there is also a scanty of it.
But most times whenever the value increases, this is mostly inflated by the government. This is mostly profit oriented. Especially when the currency has a worldwide recongination.

I do not think that the value of Fiat currency increases during the recession. The crisis has affected many countries, and in order to stay in the global economy, countries will start printing money. And this in turn will lead to inflation. And, of course, we are talking more about the depreciation of money.

The government will always want their people to use fiat for any transaction then only they can make tax from it but individuals with some IQ level will try to reduce the taxes in many ways to keep their earning with themselves.People are not ignorant but this wan intentionally hidden from human kind of purpose that is why still people doesn't know how money works.

I am not really good at this, but I think it’s not going to be the case for every currency . There are some currencies that are going to fall, and there are some that are going to increase. The great recession in 2008 can be used as an example in this case. During this recession the pounds sterling depreciated for over 25%, unlike the USD and the Euro that were less affected. So, that’s how it is.

There are things that will get really high and some will fall. This is because investors are losing interest there, and as they are selling their holdings in that particular currency to invest in other currencies, that currency will keep depreciating.

The value of currency always depreciates during a Recession(also in a normal economy the value of cash depreciates due to inflation) and the same goes with the investments. The best example is of Zimbabwe where the trillion dollar notes were also of no use to the public and also of Germany post World war II when for a single loaf of bread you would have to give a bag full of cash. So when the government prints money the inflation increases and in a recession the inflation increases exponentially.

I enjoyed the part where you talk about reasons why cash is king and but I was also expecting that you will chip in one or two things about why a currency value might rise or fall during a recession. thanks

If you take many different countries, you'll often find sharp devaluations of their national currency caused by economic problems, which can be caused by war, corruption, political instability, etc. But simple recession is not necessary causing a devaluation if this recession isn't deep. Losing a few percents of GDP shouldn't trigger a massive value loss, and if this happens it can also be a coincidence instead of direct cause.

Look at the US dollar value chart - it's mostly just a steady decline, with no sharp movements during 2008 or 1979 or the Great Depression. Big currencies are more resilient than currencies of economically weaker countries that need a lot of support from their central banks.

i don't think it will,because first Crypto is online currency that can be stored for long time while and can be use lesser fees while fiat demands high transaction fees and in this part Crypto is advantage right?
This is opportunity to Buy more mate,if this will really impact crypto market then this is what we all waiting for,buying at dip and selling high.

For me, I think even if there is a recession or not, fiat will still do its thing. Fiat are not that really affected when there's no transactions or activities that are happening in the market to circulate the money. Cryptocurrencies are the most affected because most of the coins are volatile in the market and there are factors that can affect its price. If you are knowledgeable about the effects of recession in the economy and market, you will see that without movement, nothing will happen in terms of fiat because the government are already manipulating it with their full potential. Some countries are not that prioritizing the use of cryptocurrency in their country.

Yes, fiat are not that affected but nowadays, cryptocurrencies are much necessary and being prioritized by people because of its improvement in advertisement. As the market have no activities-related to cryptocurrency, bitcoins will really become less useful in transactions instead people will just hold it and wait for the increase in its price.

People are really knowledgeable and intelligent enough depending on the situation where they will benefit their assets completely. In terms of government, I know that they are only prioritizing the use of fiat because most of the people in the community are still ignorant about how market moves and they don't care about the recession, they just earn and spend their money and that's it.

Cash is king in the face of contractions and economic recession. When faced with conditions of slow down or tight money, the one in charge is cash. In a crisis position caused by the corona pandemic, many opportunities arise due to credit traps or speculative acts. So for this pandemic, you should prepare cash money by selling unproductive assets or investing in short-term trading to reduce risk.

Government policy to overcome the financial crisis by controlling debt recognition and money market securities by tightening fiscal causes stress in the economy. The ups and downs of the value of a country's currency are influenced by the way the market and other worlds view a country's economy.

The truth is that the value of fiat currency depreciates, not relative to other fiat currencies but on its own. That is true regardless of whether there is recession or not.

If there is no recession, the normal design of fiat will continue to work as usual, which means that its value will depreciate over time.

If there is recession, interest rates would likely fall, currency would become less attractive, and therefore its value will fall. Not to mention that the central bank would be printing more and more money out of nothing, thereby accelerating the erosion of its value.