The main cause of inflation is the printing of more and more banknotes until they eventually become worthless because according to the law of the market, increasing supply leads to a decrease in value, and this is what happens with fiat. The more paper money is printed, the more its value decreases.
The main reason for printing more paper money is the wrong government economic policies. When the government adopts a wrong economic approach, this leads to emptying the state treasury of cash reserves. To solve this problem, the government’s smart economists print more paper money, which causes a bigger problem and ultimately leads to inflation. Loss of currency value.
Topic: The Devaluation of fiat money is powered by Inflation (Read 389 times)
Devaluation of fiat money is powered by inflation?
The loud and clear answer is a big NO. Here's a huge misconception about the devaluation and depreciation of money. Both are entirely different terms with different meanings, but related to currency, of course. The thing is, currency devaluation is controlled by the central bank or monetary authority of the country. Currency depreciation is driven by market forces of demand and supply. Devaluation causes inflation risk; it can lead to inflation, eroding purchasing power. But inflation is the cause of the depreciation of currency, and it's a natural decline in currency value. Depreciation of currency has a long-term impact on the economy as compared to currency devaluation, which has a short-term impact on the economy.
The loud and clear answer is a big NO. Here's a huge misconception about the devaluation and depreciation of money. Both are entirely different terms with different meanings, but related to currency, of course. The thing is, currency devaluation is controlled by the central bank or monetary authority of the country. Currency depreciation is driven by market forces of demand and supply. Devaluation causes inflation risk; it can lead to inflation, eroding purchasing power. But inflation is the cause of the depreciation of currency, and it's a natural decline in currency value. Depreciation of currency has a long-term impact on the economy as compared to currency devaluation, which has a short-term impact on the economy.
War and conflict can cause disruptions in economic activity and the supply and demand of goods. This can lead to price increases and inflation. Rising prices for raw materials, such as oil, can cause price increases and inflation. This increase in raw material prices could affect production, transportation and production costs.
They are all part of the reason for inflation, when people or investors do not trust a certain country's currency, they may launch foreign currencies or look for ways to invest in other assets, leading to the devaluation of that currency.
They are all part of the reason for inflation, when people or investors do not trust a certain country's currency, they may launch foreign currencies or look for ways to invest in other assets, leading to the devaluation of that currency.
If a country's currency loses value rapidly devaluation has occurred and devaluation indirectly causes inflation. Fiat currencies are controlled by governments and don't have any maximum supply. This causes money to be printed for free and causes the currency of that country to lose value and be devaluated. Inflation occurs when the devalued currency loses serious value. For this reason, it is possible to say that the triggering factor for devaluation is inflation and the triggering factor for inflation is devaluation.
In other words, both possibilities actually trigger each other and only occur differently in terms of processes. While inflation occurs relatively easily and quickly against devaluation, devaluation occurs relatively slowly against inflation. Although both of them have serious negative effects on the country's economy it should not be forgotten that some of these effects are similar or the same.
In other words, both possibilities actually trigger each other and only occur differently in terms of processes. While inflation occurs relatively easily and quickly against devaluation, devaluation occurs relatively slowly against inflation. Although both of them have serious negative effects on the country's economy it should not be forgotten that some of these effects are similar or the same.
A country's currency is controlled by the government. Inflation is a bit of a state disease. During inflation, the prices of goods increase and the value of money decreases. This issue can be controlled by the government. But if the system is weak, it will increase day by day. Inflation is a curse for a country. In a country where inflation occurs, the people of the country suffer many hardships. fiat currency is also controlled by the government and banks. All of them are under the control of the government. The better the government management, the lower the inflation rate. A proper market system plays a major role in controlling this.
Saving money in Bank accounts is a suicide. You should only have a small amount in your bank account for day-to-day purchasing. Bonds are the best option, I think, if the person is not willing to take the risk. Other options, such as Gold, Silver, Property, etc. can also be considered. At the moment, inflation is a global phenomenon, and people are living paycheck to paycheck in most countries.
In some cases saving amount in bank is a wise choice because when you invest in something else then you cannot take it out when you need it but from bank you can take it out anytime when an situation of emergency arise.
It is not necessary that you will have to save money in only one site but you can select different cites and divide your saved amount in bank, bitcoin and some other business.
Keep check on your amount after sometimes because saved amount can be depreciate and devalued with the passage of time but there are also possibilities of earning more with such a saved amount so checking of amount is necessary.
What Causes inflation: For example when the demand for a particular products is higher than the supply,that way inflation has taken place.
Another one is when prices goes up and affect everything including supply. And dont meet up to a persons or country needs and wants.that way inflation has ocurred.
Inflation can also occur when the government engages in excessive money printing, causing the value of money to diminish. Consequently, the prices of goods increase in order to match the devalued currency.Another one is when prices goes up and affect everything including supply. And dont meet up to a persons or country needs and wants.that way inflation has ocurred.
Zimbabwe once experienced hyperinflation reaching 231% because the Central Bank of Zimbabwe routinely printed money to finance the nation's budget deficit. Monetary policies like this rendered the currency worthless, forcing people to spend more money to acquire goods, but also allowing them to earn a substantial income through ordinary work.
There will always be inflation. However getting 10% inflation is not normal. It hurts many people living pay check to pay check and those that are savers.
Sometimes, a moderate amount of inflation is considered healthy for the growth of an economy. But, yes, inflation touching double figures is always bad news for the people as the commodity prices will increase, and the buying power will decrease, hence the devaluation of the currency. It is also not good for the economic growth of a country.
Quote
Normally you should never hold cash in the bank. You need to have it in some form of investments such as stocks or even bonds. Right now you can get 5% with most bonds and it’s risk free pretty much. So with the inflation we got right now, you are pretty much breaking even.
Saving money in Bank accounts is a suicide. You should only have a small amount in your bank account for day-to-day purchasing. Bonds are the best option, I think, if the person is not willing to take the risk. Other options, such as Gold, Silver, Property, etc. can also be considered. At the moment, inflation is a global phenomenon, and people are living paycheck to paycheck in most countries.
There will always be inflation. However getting 10% inflation is not normal. It hurts many people living pay check to pay check and those that are savers.
Normally you should never hold cash in the bank. You need to have it in some form of investments such as stocks or even bonds. Right now you can get 5% with most bonds and it’s risk free pretty much. So with the inflation we got right now, you are pretty much breaking even.
Normally you should never hold cash in the bank. You need to have it in some form of investments such as stocks or even bonds. Right now you can get 5% with most bonds and it’s risk free pretty much. So with the inflation we got right now, you are pretty much breaking even.
One of the main cause of inflation is excess fiat money in economic cycle. This leads to poor balancing of the overall system, and creates troubles with money distribution... Usually the process is be launched with "money printing press". However, there are some other sources of inflation. It can happen if "whales" get rid of some part of their overall money. In fiat world "whales" are richest tycoons and global banks. They can also be the cause of inflation. Also, they control inflation rate.
What you say is not wrong and it is what it is but there are many options out there to buy and sell Bitcoin. When most people think of buying Bitcoin using fiat currency. Yes. I hope the feeling of being part of the monetary revolution is the right feeling.
This isn't the first time that I read that the increase of aggregate demand and/or the decrease of aggregate supply devalues money. Indeed, if the aggregate demand beats the aggregate supply, the price increases. The same is true when the aggregate supply falls, that's even if the aggregate demand is unchanged.
However, seldom is it mentioned that one of the biggest, if not the biggest, factors of fiat's devaluation is the irresponsible handling, or even outright abuse, of monetary supply. Central banks are printing so much money out of thin air. This money is backed by nothing so there's unlimited supply of it. Add to it that the banks and other financial institutions can also create unlimited amount of credit. All of these devalue money.
Why is this not properly emphasized in economics lectures, classes, and courses? Why are the abuses of governments and central banks barely mentioned when speaking of the weakening value of money when in fact they're the main culprit?
However, seldom is it mentioned that one of the biggest, if not the biggest, factors of fiat's devaluation is the irresponsible handling, or even outright abuse, of monetary supply. Central banks are printing so much money out of thin air. This money is backed by nothing so there's unlimited supply of it. Add to it that the banks and other financial institutions can also create unlimited amount of credit. All of these devalue money.
Why is this not properly emphasized in economics lectures, classes, and courses? Why are the abuses of governments and central banks barely mentioned when speaking of the weakening value of money when in fact they're the main culprit?
Fiat money is a money or currency that is unable to change its function or pattern,which is signed and decreed as a legal tender.having this money is like owning an asset because you cant change it,but it can be use as an exchange for something.
This fiat money is a meduim of exchange in the form of coins,paper and all of that.since its existence it has been an easy way of exchange for demands and wants and has helped in reaching to the goals of oneself.which have made the approach and desires for this fiat money to be over emphasised.
But the insurgency of inflation have empowered the devaluation of this money.
Inflation is the general increase or rise in the prices of goods and services,when inflation is encountered it cause a total increase and alters the prices of goods and thus amount to the devaluation of fiat money.
What Causes inflation: For example when the demand for a particular products is higher than the supply,that way inflation has taken place.
Another one is when prices goes up and affect everything including supply. And dont meet up to a persons or country needs and wants.that way inflation has ocurred.
Then Devaluation: The main power engine for inflation of this fiat money.This happens when a particular country is trying to adjust to the tendency of balancing the fiat money to balance with trade(Good and services).when this is done money or currencies value is reduced and make importation of goods to be downgraded and exportation of goods and services to be reduced.
The devaluation of this money has made exports to increase and importation to decrease,because since the money is devalued as inflation arised,the neccessity of meeting to that demand is reduced,and so therefore encouraging exportation of this goods would help in keeping It at a balance.
So i think this should be thrown into the house for better enlightenment and better discussion.
This fiat money is a meduim of exchange in the form of coins,paper and all of that.since its existence it has been an easy way of exchange for demands and wants and has helped in reaching to the goals of oneself.which have made the approach and desires for this fiat money to be over emphasised.
But the insurgency of inflation have empowered the devaluation of this money.
Inflation is the general increase or rise in the prices of goods and services,when inflation is encountered it cause a total increase and alters the prices of goods and thus amount to the devaluation of fiat money.
What Causes inflation: For example when the demand for a particular products is higher than the supply,that way inflation has taken place.
Another one is when prices goes up and affect everything including supply. And dont meet up to a persons or country needs and wants.that way inflation has ocurred.
Then Devaluation: The main power engine for inflation of this fiat money.This happens when a particular country is trying to adjust to the tendency of balancing the fiat money to balance with trade(Good and services).when this is done money or currencies value is reduced and make importation of goods to be downgraded and exportation of goods and services to be reduced.
The devaluation of this money has made exports to increase and importation to decrease,because since the money is devalued as inflation arised,the neccessity of meeting to that demand is reduced,and so therefore encouraging exportation of this goods would help in keeping It at a balance.
So i think this should be thrown into the house for better enlightenment and better discussion.
One of the main cause of inflation is excess fiat money in economic cycle. This leads to poor balancing of the overall system, and creates troubles with money distribution... Usually the process is be launched with "money printing press". However, there are some other sources of inflation. It can happen if "whales" get rid of some part of their overall money. In fiat world "whales" are richest tycoons and global banks. They can also be the cause of inflation. Also, they control inflation rate.
I dont agree it has to be fake, a few countries not many back every currency note with equal resources on demand; in main however FIAT means debt. The intention for the value to be real is there but then politics occurs and standards slip. The idea central banks arent compromised in their judgement is a make believe scenario, they can and are called to account by political entities quite often. Human nature gives in to whats easiest, since people do expire in recessions from the job losses etc. I understand why people give up and abandon the value of money vs hard decisions.
Its too tempting to pay every new bill with a freshly printed cheque paid for by someone else a few years from now. No proper budget is required, with some countries this quickly fails as there is little demand for that currency or debt denominated. The danger with a world reserve currency is there is always demand there and the people who pay the price for failure in a currency standard might be the other side of the world with no representation they dont matter.
Its too tempting to pay every new bill with a freshly printed cheque paid for by someone else a few years from now. No proper budget is required, with some countries this quickly fails as there is little demand for that currency or debt denominated. The danger with a world reserve currency is there is always demand there and the people who pay the price for failure in a currency standard might be the other side of the world with no representation they dont matter.
Fiat money is a fake money it's not real money. One should get knowledge about investment and businesses , if you are a business business owner, you can make column of assets and liabilities. Fiat money is managed and printed by Government, government can print money as his desire, in this way inflation occurs. Inflation occurs due to over print of Fiat money. Prices of things increases and goes to sky. If a government is wise he can give relief to public by solving problems of people. Inflation destroys
the country's base. And after, if it becomes uncontrolled, country can bankrupt. The whole power is in the hands of government. Government Can increase or decrease taxes and can make inflation or deflation.
the country's base. And after, if it becomes uncontrolled, country can bankrupt. The whole power is in the hands of government. Government Can increase or decrease taxes and can make inflation or deflation.
OP, would you mind telling us why did you post this basic info about inflation and currency devaluation?
Is there any reason behind this decision?
Most of the people in the forum know a thing or two about macroeconomics and finance. Do you want to educate anyone? Are you simply sharing a bunch of generic thoughts? Are trying to boost your post count by writing low quality posts?
Sharing obvious conclusions like "the sun is hot" or "water is wet" have the same amount of logic like the conclusion that "inflation makes fiat money less valuable". Do you have any other genius and groundbreaking discoveries to share with us?
I would guess that this alone is a good enough reason to invest into bitcoin, that could be a reason? I mean it is one of the main reasons why I invest into bitcoin for example, because I know that if I keep my money in fiat then I am going to lose money and that is why I think it should be important to make it change. I get that it is not going to be that much of an important thing that will change it but at the end of the day it is going to be fine.Is there any reason behind this decision?
Most of the people in the forum know a thing or two about macroeconomics and finance. Do you want to educate anyone? Are you simply sharing a bunch of generic thoughts? Are trying to boost your post count by writing low quality posts?
Sharing obvious conclusions like "the sun is hot" or "water is wet" have the same amount of logic like the conclusion that "inflation makes fiat money less valuable". Do you have any other genius and groundbreaking discoveries to share with us?
If you keep your money in bitcoin, then you are going to make a profit from it and if you make a profit from it then you are going to be fine with the results. If you keep it in fiat however, then you are going to lose money and you will be upset about it in the future.
Inflation is one of the economic terms that is often misunderstood. In a good economic system, controlled inflation is necessary to create value on the commodity and to force consumers to spend instead of displacing. As an example of the importance of inflation (in its simple sense, which means an increase in product prices), we can ask why prices do not increase in Japan[1] and how It was bad for the economy[2].
In general, inflation of 2% is good for most economies, and sometimes as long as the government can control inflation, the wheel of the economy will turn.
The problem comes from excessive and explosive inflation, where the government is unable to control inflation, prices increase daily, and the currency rate decreases, and this is what many believe is the concept of inflation.
Excessive inflation has internal causes related to state policies, external causes, and causes related to the structure of the economy. It is a symptom of a disease, and without identifying the cause of hyperinflation, the solutions will fail.
I definitely agree with that. Inflation in itself isn't that bad as long as it's not affecting people adversely and is just for the improvement of an economy. However, that isn't the case with most countries and their economies. The inflation that has hit most of the countries recently, particularly third-world countries, it's basically too much and it's affecting the people living in those countries that are not earning a lot of money to stand tall against the excessive inflation.In general, inflation of 2% is good for most economies, and sometimes as long as the government can control inflation, the wheel of the economy will turn.
The problem comes from excessive and explosive inflation, where the government is unable to control inflation, prices increase daily, and the currency rate decreases, and this is what many believe is the concept of inflation.
Excessive inflation has internal causes related to state policies, external causes, and causes related to the structure of the economy. It is a symptom of a disease, and without identifying the cause of hyperinflation, the solutions will fail.
On the other side, the governments of these countries are basically busy building their and their families futures instead of taking care of the country and its economic structure that is devastated and people are dying of hunger because they can't buy the basic necessities due to the increasing inflation.
Inflation is the most natural thing that happens in some corrupted governments around the globe.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
There's a corrupt and manipulative force behind inflation and how the people go about the whole process with inflation to the extent of having a negative impact on the economy always, yet we cannot do without having this same inflation despite it's rendering the worth and value of fiat worthless gradually with time, am sure all these among other reasons are part of what makes other people to have decided for the new financial technology of bitcoin.
Happens all the time even in the not corrupt country since fiat is designed that way. It's not about demand and supply like OP is saying. It's always about printing bank notes that cause it but FED is also making it worse because of the interest hikes.
Since the FED wants to control inflation, they would need to start reducing the demand for commodities even the basics by increasing the prices through inflation or making companies bankrupt and no jobs for the people. When people buy less, demand decreases.
Inflation is the most natural thing that happens in some corrupted governments around the globe.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
There's a corrupt and manipulative force behind inflation and how the people go about the whole process with inflation to the extent of having a negative impact on the economy always, yet we cannot do without having this same inflation despite it's rendering the worth and value of fiat worthless gradually with time, am sure all these among other reasons are part of what makes other people to have decided for the new financial technology of bitcoin.
Correct time frame for gold is about a decade, thats how long its going to take to possibly setup a proper mining area and infrastructure to support the filtering and refinement of all your raw material. If supply is taking ten years to come online it explains part of why the price can move so much before it starts to encourage more supply to come onlne. Trying to judge it by weeks or months even and call it safe to invest I think is a mistake thats not fault of the element itself, alot of the pricing is speculation and reflection of the dollar. We suffer the same effect in BTC and I try to seperate that rapid main market influence from the proper progression that BTC has over time.
Inflation is the most natural thing that happens in some corrupted governments around the globe.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
And they are happy every single time inflation happens, because they are the only one that's being benefited by this kind of event. According to what I've read in google, inflation is a hidden tax, that's why government always try to minimize it only or ignore it because they don't want to waste the money of their own citizens because it is theirs already.
Jump to: