Topic: The Devaluation of fiat money is powered by Inflation - page 3. (Read 358 times)

Living in Argentina with 150% INflation rate. I can tell how this can crash an economy

Devaluation of fiat currency is not only caused by inflation, there are many more factors that must be considered which have contributed in many ways to how we are being affected by inflation in holding a fiat currency in an economy, have we considered some of the policies that surround the monetary system in fiat, how the government officials control the process, how it's been manipulated or maybe we ever think of the kaw behind the repeatition in continuous printing of fiat currency without limit, i see this as a broad discussion with how to tackle the overall causes of fiat devaluation over time while inflation is just the most emphatic cause we all mentioned often leaving others causes or factors behind.

From the article, I have a few questions. 
If the cost of a product is $20 for example, there is no way that product can be sold for $15 just because that's the price that the people will buy. No company would operate like that. A company would food eventually if they followed this business model. The goal is to make a profit, so if they're not making a profit then there's no point in the business.
Or, they're making a profit but not much. For example, they make just $2 out of a $20 product. Isn't that a good thing that a company can't exploit people and make excessive profits off of them?

Could it also be that the people in Japan buy more less quality products?
If the cost of producing the product is $20 and the company knows that people will not buy at that price, they'll find ways to reduce the cost of production to about $10 to $15 and then sell for about $22. This would help the company make more profit but they would sell less quality products, to their Japanese market at least.

Another question,
Does it mean that the forces of demand and supply don't play a role in the determination of prices in Japan? From the article, I can conclude that it is the people who determine the price, so no matter how the market is, the buyers still determine the price.

Finally,
Does this also affect imported products from foreign companies or do the citizens only do this to local products?
Because there is no way foreign companies would export their products and services to Japan if the people would just buy them at a price they want even if the company is not making the kind of profit they desire.

The topic was quite hard for me to understand actually I did not knew that devaluation can cause inflation instead you tried to emphasize that inflation will makes yours currency lose value! Correct me if I take it wrong. Well, the point is in the hope to making the value of one country's currency equal to another things, many factors plays important role, like monetary policy, interest rates, etc. etc.

So after huge discussion things came back to the fact that higher demand of goods means more inflation, lower supply of money in the circulation means lesser inflation as there will be less money to buy things.

PS: Well, if the ratio between consumption and production will be managed then inflation can be controlled.

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 think that talking about such a subject requires more, but this story in brief.

[1] https://www.asahi.com/ajw/articles/14462174
[2] https://www.eastasiaforum.org/2022/08/12/japans-low-inflation-conundrum/

Everything about the money you mentioned is determined or controlled by the government or a party that has the authority to issue regulations regarding how much money must be printed or made each year.

Acceptance of fiat money as a transaction tool that makes it easier for people as a medium of exchange to get something because fiat money is a legal tender that is recognized by all countries.
But from the way fiat currency works, its value depends on the government or central bank, so it is not surprising that its value can change or fall over a long period of time due to inflation and several other things.

There is something even greater than fiat currency but the government or interested parties are not willing to admit it or make it a good financial system, namely bitcoin.
This type of currency needs to be discussed in the house specifically in order to get the answer who is better.

waste fiat money instead of gold, gold has been proven to maintain asset values for hundreds of years, its value has remained even increased.

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.