The Dollar is fairly strong at present as compared to other currencies, but don’t be fooled into thinking the Dollar is all that great – I can assure you that it isn’t. How so? You might ask. Well, a good way to view the situation with regard to the Dollar and other currencies is to see the Dollar as being the best apple in a basket of rotten apples.
They are all well past their best and are in the process of rotting. They will at some point be so spoilt as to become unfit for human consumption. Obviously, we don’t eat currency, but I hope that you the idea.
Why do I say this? Well because they are all “fiat currencies” and historically, all fiat currencies have gone to zero. There’s no reason to believe that this time will be any different. This is logical. It’s always a good idea to be as logical as possible. And we can see evidence of them failing already – look at the Yen, the Euro and the Turkish Lira. So, some currencies are rotting faster than others.
There’s also an indisputable mathematical argument about National Debts and debt to GDP ratios which I won’t go into here, but is very much linked in to the issue at hand.
Anyway, to see another failing currency look at Argentina. Argentina is in a whole lot of trouble at present. It has an inflation rate of around 100% and interest rates around 75%.
To my way of thinking, all nations will, more than likely, follow the Argentinian path.
And if you’ve listened to other videos I’ve done concerning Inflation you will already know that Inflation is, in effect, a “debasement” of the currency caused by an increase in the Money Supply, or, as I prefer to say, excessive currency creation.
People tend to think of inflation as being rising prices. So in an inflationary environment, people might complain about the rising prices; grumbling that things in the shops are getting more expensive.
But, I think that it’s a mistake to think of inflation in this way. Rising prices are the end result of inflation - the increase in the money supply. The rising prices that we see, in say a supermarket, are the fruits of the tree – the apples on an apple tree.
I would suggest that a better way to think about inflation, is to see inflation in terms of purchasing power. So, when the purchasing power of a currency decreases, the ability of that currency to pay for goods and services decreases.
Inflation slowly eats away at purchasing power. With Inflation as it is, all currencies are losing their purchasing power. Populations will at some point, eventually, wake up to this fact and also the seriousness of this situation.
