If history is good for us, then 2020 is likely to be the precursor of a long and terrible economic depression in countless countries around the world. In the past year, economists and analysts have been discussing the specific circumstances of the US economy and the dollar’s rapid loss of dominance on a global scale. Although some analysts believe that this old saying “cannot happen here,” many economists expect that rent control and the increase in hyperinflation will damage the United States and many other powerful countries.
Countries that allow large-scale stimulus injections will face severe economic impact
The outbreak of the coronavirus is an important excuse for the World Bank cartel to create unprecedented promissory notes. In the United States, Americans have seen a $9 trillion stimulus injection, but the Fed’s 2020 stimulus measures have hardly aroused the masses. It is estimated that from 2020 alone, the United States has created 22% of the total US dollar issued since the birth of the country.
In addition, the United States is not the only country that has seen a large number of Covid-19-related stimulus plans. Countries such as Japan, China and the European Union have also injected trillions of dollars into the private sector. The large amount of currency creation convinces economists that the joint efforts of rent control and uncontrolled hyperinflation will put countries like the United States under tremendous pressure and may contribute to the collapse of laws.
An analyst from seekalpha.com recently stated that he fully believes that the United States is moving towards hyperinflation. The analyst wrote three weeks ago: “The ratio of deficit to expenditure is as high as 60%, which is higher than the hyperinflation threshold of 40%.” “GDP fell by 31.7% in the second quarter of 2020, but it will Improved. The company’s debt is at a record high and the delinquency rate is rising. [And] The dollar will lose value due to ultra-low interest rates and quantitative easing policies. He added. The author also believes that the precious metal gold is “the only safe haven.”
The balance writer Kimberly Amadeo (Kimberly Amadeo) published an editorial about the possible devaluation of the U.S. dollar and “what to do if this happens”. Amadeo insists that if the U.S. dollar falls sharply, “anyone holding U.S. dollar assets will sell them at all costs.”
“This includes foreign governments that own US Treasuries. It also affects foreign exchange futures traders. Last but not least, it will hit individual investors.” Amadeo further emphasized. The Tianping writer continued:
Before the dollar may collapse, two conditions must be met. There must be potential weaknesses in the value of the dollar, and there must be viable options. In other words, there must be a reason for people fleeing the dollar, they must have a place to go. Otherwise, the US dollar will remain the world’s global currency. Most international contracts require payment in U.S. dollars, which also increases its stability.
The history of those who did not learn from their mistakes repeats itself
Many people believe that the United States particularly followed the same path as the Roman Empire centuries ago. In the third century BC, entering the age of empire, Roman officials figured out how to reduce the purity of coinage. By greatly reducing the value of the coin, the Roman government was allowed to spend more. Modern central banks and the Federal Reserve have created a program that makes it difficult for ordinary citizens to detect a depreciation of purity. However, many other countries have shown in the course of history that the plan will not last forever, and in the end, the Fiat shell game will end in disastrous defeat.
There have been many modern examples of inflation, devaluing a country’s legal currency to the point where it is almost worthless. Johns Hopkins University (Johns Hopkins University) Professor of Applied Economics Steve Hanke (Steve Hanke) pointed out that the definition of hyperinflation essentially means that the inflation rate exceeds 50%. In addition, due to the Covid-19 epidemic, politicians from various countries have issued rent and eviction control measures. This means that if you live in a rent-controlled area, the landlord cannot increase the rent of the tenant, and in some cases, this year, the United States and other governments have implemented eviction orders.
Early examples in history show that the combination of rent control and hyperinflation is disastrous for many economies around the world. For example, as early as the 1920s in Weimar, Germany, rent control and hyperinflation caused serious damage to the German paper printing of the currency of the Weimar Republic. The Weimar crisis has caused serious civil and political instability in the country. From August 1945 to July 1946, Hungary also suffered from hyperinflation, and the Peng Gao inflation rate jumped to 207%. During August 1946 (the new currency of Hungary), the forint kept the monetary infrastructure stable.
From 1992 to 1994, Yugoslavia’s inflation rate rose, destroying purchasing power. The country’s inflation rate is the highest ever, climbing to 313,000,000% within 30 days. As the Zimbabwe dollar experienced hyperinflation, Zimbabwe continued until the spring of 2007 and until November 2008. Since the Zimbabwe dollar was abandoned in April 2009 and monetized in 2015, the country has become different. Currently, due to the devaluation of the sovereign Bolivar’s currency destroying the currency, hyperinflation is also causing serious damage in Venezuela.
The hyperinflation in Venezuela started in 2016 and has exceeded 1,000,000% by 2018. In the second year, Bolivar began to be weighed rather than calculated, and the inflation rate reached 10 million%. According to data from the Central Bank of Venezuela (BCV), from 2016 to 2019, Bolivar’s inflation rate was as high as 53,798,500%. Of course, many other South American countries have also felt the pain of the economic downturn in 2020. In addition to Venezuela, countries such as Brazil, Nicaragua, Peru, Argentina and Bolivia are also facing dire economic consequences this year.
In addition to gold, many people believe that digital currencies such as Bitcoin (BTC) will flourish in a possible economic crisis. This week, the market valuation of crypto assets exceeded that of the world’s largest banking giant. Globally, the market value of Bitcoin (BTC) has jumped to more than 350 billion U.S. dollars, surpassing banks such as JPMorgan Chase USA, ICBC China, BAC USA and CCB China.
Although Kimberly Amadeo, the author of Balance, said there must be a viable alternative, cryptocurrency advocates believe that the alternative might be Bitcoin. In fact, despite the fact that other major currencies such as the US dollar suffer from inflation, cryptocurrency supporters believe that the world may experience hyper-bitcoinization.
“Super Bitcoinization is a voluntary transition from inferior currencies to superior currencies. Its adoption is a series of individual entrepreneurial actions rather than a single monopolist manipulating the system.” Daniel, creator of the term “Super Bitcoinization” Kravis explained in March. 2014.
No one can be sure that events like hyper-bitcoinization will happen, but Bitcoin (BTC) has been the best performing asset in the past decade, surpassing all stocks, stocks and commodities under the sun. Even in 2020, despite the global economic turmoil, the performance of BTC and many alternative crypto assets is once again superior to everything the world can provide in terms of investment performance.
In the past 12 months, the exchange rate of BTC against the US dollar has risen by 154%, while Ethereum (ETH) has risen by 356% over the same period. In the past 30 days alone, BTC has risen by more than 40%, while ETH has risen by 44%. There are currently more than 7,000 crypto assets, which are now worth more than 536 billion U.S. dollars. Compared with fiat currencies, cryptocurrencies are a viable option, which is very noteworthy.
Despite these facts, the editors of Balance and Kimberly Amadeo warned that “Bitcoin cannot replace the U.S. dollar as the new world currency.” Amadeo’s editorial discusses such things as investing in foreign common stocks and bonds, holding liquid assets, and investing in U.S. dollars. The idea of buying gold and precious metals when showing signs of collapse.
How do you see the possibility of a country like the United States suffering from hyperinflation in the future? Do you think cryptocurrency is superior in a world where fiat currencies are collapsing? Tell us what you think in the comments section below.
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