#193
Currency Wars
Published:
Aug 11, 2018
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One of the most common criticisms of bitcoin is its volatility. How can you practically use a currency whose value is so unstable?
However, traditional currencies are taking the cake this week. Turkey's currency, the Lira, was in freefall Friday – losing up to 20% of its value against the dollar after President Trump threatened to increase tariffs. The Lira has experienced more than 40% inflation so far in 2018.
Moreover, the U.S. Treasury Department is closely monitoring China for signs of manipulation. By devaluing their currency, China can make its exports cheaper to buy - and thereby counteract Trump’s tariffs. Some currency analysts believe Trump could retaliate by devaluing the U.S. dollar.
The risk with such devaluation is that it can lead to uncontrollable inflation – with everyday people holding the bag as their personal wealth diminishes.
And those who believe that developed countries like the U.S. are immune to inflation are not students of history. In the 1970s, the US, UK, and other industrialized nations experienced a period of “stagflation” – whereby inflation was rampant while economic growth was stagnant.
Though bitcoin has its flaws, geopolitical warfare is not one of them as of yet. Ultimately, whether traditional currency or cryptocurrency, a wild ride is not what you want!
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Currency Wars
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Select Financings
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