Topic: The Devaluation of fiat money is powered by Inflation - page 2. (Read 358 times)

If we're talking about fiat money, it's like placing a bet on a game - once you're in, there's no turning back. Fiat, like a gambler's chip, has a set value, but that value can diminish with inflation. Devaluation is like when the house suddenly decides to reduce the value of your chips after a bad streak. The only difference? There's no "cash-out" option

Inflation? Think of it as the casino changing the game rules on you. When demand exceeds supply, or when there are sudden price hikes, that's the game being rigged. The value of your chips (fiat money) drops, and suddenly you're not playing with the same amount you thought you had

The strategy of devaluing to balance trade is equivalent to a gambler trying to diversify bets to minimize losses. And just as exporting more helps balance out devaluation, a gambler might choose games with better odds to try and even out the play

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.

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?

This is hard to swallow fact but this is the truth about today's economy. I guess when the cost of goods and services rises faster than one's income, it can lead to difficult choices and lifestyle adjustments. People may need to prioritize essential expenses like housing and healthcare, often at the expense of discretionary spending on items they used to enjoy. Navigating the impact of inflation requires careful financial planning, budgeting, and, in some cases, seeking additional income sources or investment opportunities to counter the erosion of purchasing power.

The existence and preference of alternatives is the best bet. Changing shopping locations can also find one in a place of better price offers compared to others.
One reason I think there's inflation is if the purchasing cost of the citizens in a country has risen, in that, they can afford alot with little cash and live fine. Where this is the case, we see the government increase interest rates, there's automatically inflation of prices and housing and almost all sector including energy gets hooked in.

I think that only those people whose income is ahead of expenses can buy goods at higher prices. And if we look at a person with a fixed income and who before inflation did not have enough earnings for all needs, then after rising prices, he will have to fall in love with cheap rice instead of expensive potatoes, or change his country of residence. But in the new country, he will have more expenses for housing and medicine.

The biggest misunderstanding that Japan can help overcome is that by simply printing money you don't always generate inflation, inflation is not just the result of throwing money at your citizens, it's the result of your citizens spending that money in a way that the manufacturing and service sector can't keep up with it.


The first thing when analyzing how a company is run is to drop your bias about the company making excessive profits just because it sells stuff you think is worth 1$ for 10$. There are so many costs in the process of selling a product that sometimes they completely overshadow the production costs, not even mention the initial investment, yeah I pay $100 for a bag of grain that will earn me in autumn 20 tons of wheat so I should sell the wheat for 1 cents a kilo, except for the fact that one s770 harvester costs 300k!

Another thing is that operating at a loss might be better than shutting down, it all depends on the sunken cost  some might just go like this for years as pulling completely out would trigger heavier losses, the best example comes actually from bitcoin mining, there are tens of them trapped in this, if they stop mining at 1 cents profit they incur such heavy losses that they don't even want to think about.


The buyers always determine the price, if people stop buying the price will either go down or the company will go out of business, if the people clean up the shelves the investors and the board of that company would have to be stupid not to increase the price, wouldn't you do the same?


Inflation will always cause the devaluation of a currency, devaluation of a currency will also result, although in some cases with a bit of a delay, in inflation, at least when it comes to consumer prices.

Bullshit!



You can clearly see that if you bought gold between March and June you're at a loss.

Another bullshit.

Check gold prices in the period of 1993 and 99. Not only it wasn't up each year but going down. If you bought it anywhere between 93 and 96, you were down on your investment in 97, 98 and 99, so 4 years of flat prices were followed by 3 years of falling prices, reaching 40% loss in August and September of 99.
This was a bloodbath for a relatively safe asset like gold. When bitcoin loses 10% everybody screams about crash and a bear market, so imagine what was happening when gold was losing 10% a year for 3 consecutive years

Bottom line, no investment is perfect and all of them require patience, but I'd take bitcoin over gold any time.

Gold always shows higher price although it requires some months to increase in value but the lower price does not exists as longer as that of crypto coin. These days gold rate is increasing and that of crypto is going down, I don't say that crypto is not a good way to make investment but as compared to crypto gold is a wise choice for profitable growth.

According to my experience gold never disappointed its holders and its true that for sometime it downs but when we compare its price on annual basis so we can conclude that gold is always better in price than previous year.

Your post looks uncoordinated but something can be made out of it anyway. Apart from fall in supply which could lead to scarcity and the rise of the price of goods or services which is what is called inflation, you also have to know that the government can deliberately cause a level of inflation maybe moderately to control the amount of money in circulation. To this effect if government want to have the policy to circulate money, they could reduce the rate of interest on loan and that can cause money to be in the reach of many and that means more money chasing fewer goods. That will lead to inflation but it is artificial and can be controlled.

Hyperinflation is what is not good with a country economy because it will cripple the economy when the government of that country cannot control it. Another thing that can cause a general world inflation is a pandemic. We saw the damage that Covid-19 pandemic caused to the world economy because there was lock down everywhere and no production,some counties hasn't still recovered from the damage that the pandemic did to their economy. War can cause inflation too,all these that I mentioned are fuel to inflation. A country that doesn't produce but rather depend on exported goods will be a slave to inflation just like some Africa countries.

Inflation is good if it is moderated. Governments create inflation. What is bad is the extreme of it which is hyperinflation. The uncontrolled inflation that the government creates through the printing of money is only beneficial in the short term especially during a recession. In the long-term people can't keep with the rising price especially if those on fixed incomes.

Let me summarise by saying that in the short-term inflation helps because there will be more money in circulation and people would have more to spend but then when it is left uncontrolled, the money becomes useless no matter how much you have and demand will no longer increase but remain either stagnant or decrease.

Dear Marissa, I am sorry to say that you have not caused enlightenment with your post, and I think it is your way of writing that does not help. Your nickname sounds Spanish, I suggest you to go to the local Spanish forum to debate there as well.

To try to clarify what you are saying and to do my bit, we have two parts, inflation and economic growth, which are linked. And within inflation we have inflation that is only caused by monetary policies, or inflation that is not caused by monetary policies, generally by economic growth, but also by other factors, such as the increase in energy prices.

So, when inflation is caused by monetary causes, because central banks issue a lot of money this causes currency devaluation, and in that sense the title of your thread is correct. However, when inflation is not strictly monetary it does not cause devaluation. Therefore, what you say is only partially correct.

The devaluation of currency can be caused by inflation. When the price of goods keeps increasing money will also lose its purchasing power. An example is the case of Zimbabwe in 2006 where a loaf of bread cost about Z$550,000 which was just 1 dollar. But devaluation can also be an economic strategy to promote local consumption of goods and exports. Locally produced goods will be cheaper which means people will prefer it to expensive imported goods. Currency devaluation will make the country's goods cheaper in the international market which will attract more trade partnerships.

But there are also dangers of devaluation especially if the country relies on other countries for importation of raw materials. This will make raw materials more expensive and locally produced goods may no longer be cheaper. Devaluation is a good economic policy that has worked for countries like China but it can cause harm to other countries, especially to countries that depend on others for raw materials and human resources.

Looks like the article was removed, but to answer your questions despite what it may have said: Supply and demand always dictate what prices consumers pay for products. If there's ever deviation from supply and demand, it's because the government has manipulated the market on their own accord, usually by money printing, to control price.

When a lot of new supply of money has been printed in the circulation, this also causes inflation. Everything about law of supply and demand, that's applicable to our economies.

On the other hand, Bitcoin is deflationary and that is because of having a limited supply. Its scarcity makes it a deflationary and if there are people keeping foreign currencies as their asset and reserve, it's better to have Bitcoin based on my experience.

With money printing and inflation are coming together, there could be lesser growth with these factors to none.

Inflation does not around only about the prices of the commodities, its actually based in a whole market sentiment of one country, the monetary policies also a big contributor for the inflation. Yes there’s an alternative but considering the generations now, we are still buying the things that we want even if its too expensive or even if there’s a cheaper alternative, and that’s how many deal with the inflation.

so anyone understands that with rising inflation comes devaluation. but if you look at the example of agriculture, when the country has a poor potato harvest but a good rice harvest, should inflation occur?
Won't the poor stop buying expensive potatoes? It is logical that they will buy cheaper rice and there will be no inflation.

I agree that government policies have an impact on the value of our fiat currencies, however inflation is one of the primary causes of fiat currency depreciation around the world. When fiat loses value, the country's economy suffers as a result of higher prices for products and services, and people who save fiat will no longer value what they saved.

I no longer trust keeping fiat cash because my country's currency consistently loses value to the dollar, and the little money you have on hand can no longer satisfy your wants as a result of the high cost of things. With my savings, I intend to purchase some BTC.

Inflation will destroy an economy from the losses and impediment it introduces to the order flow.  If a price is not stable then each party producing, buying and distributing cannot be sure of their costs vs margins during a sale.   150% inflation is a failure, people will do anything to get away from that problem of constant losses.  Most likely only those connected to government or crime will be able to operate properly in the end.

Gold doesnt go up in value, it has no yield either so it should not be kept for profit especially.  The biggest point is stability in that its inert and able to exist outside of these FIAT paper problems, also most of the world will accept gold so its a link to international trade.  People like to compare crypto with gold, they are different but its understandable due to similar advantages.