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It's true that fiat currencies only work well if they are managed well. And what we're seeing in Venezuela isn't even poor management anymore. It's more like
by curtis 9y ago
It's true that fiat currencies only work well if they are managed well. And what we're seeing in Venezuela isn't even poor management anymore. It's more like you took a stack of paper currency and intentionally set it on fire.
- staplers 9y agoTo clarify, currencies can be based on physical reality (paper gold) and you can extend this logic to include a government's GDP of physical goods and management of that GDP. However, that maintains the majority of value for government currencies is tied more to intangible concepts like management and policy rather than goods.
- tanderson92 9y agoIronically lighting cash on fire is deflationary.
- curtis 9y agoIn hindsight, maybe that wasn't the best example...
- bmelton 9y agoWhat's the BTU of a dolar-sized piece of paper? What's the burn duration? At what inflation point is it more practical to burn bolivars for heat than it is to buy oil/fuel/wood with bolivars?