News from "The Gouge"
Available here at "thedegouge.com"
February 1, 2022
Money Printing and Inflation
Is Inflation like Venezuala the Future of the US Dollar?
Supply and demand are essentially the fundamental basis of trade, hence the basis of value. As something becomes more available, it becomes less valuable.
This has been proven repeatedly by money printing countries throughout history. It is odd that so few are concerned that the US money printing will cause problems.
If money is printed in extreme quantities, then it looses value. There can be no escaping this fact.
Sure the US enjoys a global currency advantage, as many dollars leave the US and don't affect the US economy, so they can be replaced with "free" money. But this only provides a buffer, not an endless advantage.
The issue is that the US Money supply is increasing at a mathematically exponential rate, and the US is days away from reaching the thirty trillion dollar national debt mark. That is $30,000,000,000,000.
The US government thinks that Modern Monetary Theory (enless money printing) will be OK and have no consequences.
The problem is that history says otherwise, and in fact there is nothing modern about Modern Monetary Theory, as it has been tried repeatedly in history, and has a 100% failure rate.
Venezuela is the most modern example. To finance socialist policies (some of which were helpful to the population) the government mostly used oil money to fund these policies.
However once the price of oil dropped, and the government nationalized the Venezuelan oil industry, this source of funding dwindled dramatically.
Thus the government went on a monetary printing spree to pay for all the programs.
They printed so much money that the value of the bolivar dropped dramatically. Peoples retirements and financial security were laid waste.
The government printed so much that it took baskets of bolivars to buy anything, and instead of counting out millions of bolivar for a transaction, retailers resorted to weighing money to determine the amount.
The next standard step is the same one that has occured so often in such nations, that is to revalue the currency.
Just like the New Taiwan dollar, the Russian ruble, the Korean won, to name just a few, Venezuela started chopping off zeros and issuing new notes.
In 2008 they removed three zeros, so every thousand bolivar note someone had saved, was now worth a single bolivar.
In 2018 they removed five zeros, so every hundred thousand bolivar worth of money someone had saved, was now worth a single bolivar.
In 2021 they removed six zeros, so every million bolivar worth of money someone had saved, was now worth a single bolivar.
So if a person in Venezeula was a trillionare in 2007, and they saved that money in cash, they now had the value of a penny.
Will the US be this bad? Not likely, but it only has to get worse. The US dollar looses value every day, and has for decades.
This devlauation will very likely accelerate, hopefully not as bad as what is happening in Venezuela, but the US dollar value will certainly continue it's decline.
How can you print this much money and not devalue it?
Note all the currencies in the sterling silver tray.
The value of the silver in the tray (at $25/ozT) at four ounces, is worth more than all the bundles of cash inside of it.
Knowing all of this, is it time to invest in something other than US dollars? Gold may be the answer, or real estate?
The alternative to knowledge and adaptation, in this case is slowly losing your savings value, as is occuring in Venezuela...
This release is for informational purpose only.
No legal, financial or investment advise is given, just opinion.
Learn more at thedegouge.comCopyright 2021