Inflationary regimes have often swapped the old, depreciated-to-next-to-nothing currency for a brand new, nominally revalued and reset currency that soon sinks to next to nothing. Right now the world’s inflationary regimes are scheming to replace currencies, especially that hard to track paper money, with digital, easy to monitor, currencies. From Bill Bonner at rogueeconomics.com:
Week 28 of the Quarantine
SAN MARTIN, ARGENTINA – For half a century, America’s greatest export has been the dollar. So much so that there are now more physical dollars outside the U.S. than in it.
Overseas, people use dollars as an alternative to their own money. Foreigners are more familiar with Ben Franklin than Americans. In many places, people cling to U.S. dollars like a drowning man to driftwood.
Here in Argentina, for example, inflation is already running at about 50% per year. People think it will get a lot worse. So they prepare by trading their pesos for dollars – now at a rate of 150-to-1.
But what happens when the dollar sinks?
The question is premature. Almost naïve.
For the present, the dollar is as buoyant as an empty plastic bottle. The velocity of money – a key component of consumer price inflation – is actually going down.
Americans are happy to get dollars from the government. And foreigners are happy to get them any way they can.
But soon, everyone will see that the U.S. feds are acting like the people who run sh*thole countries. They stifle the economy with laws and regulations – shutdowns, moratoria on evictions, $1,200 checks for everyone – and try to finance it with printing-press money.
We have no superpowers here at the Diary. We cannot climb walls, fly through the air, or see through concrete walls. So we cannot tell you when or how the dollar fails.
But today, we will explore the question of what you should do about it.