4 ms·
>why 20% I earn in USD, I don't spend in USD. Therefore I am exposed to currency fluctuations. In this case it is USD depreciation because of inflation expect
by brc 16y ago
>why 20%
I earn in USD, I don't spend in USD. Therefore I am exposed to currency fluctuations. In this case it is USD depreciation because of inflation expectations and virtually negative interest rate.
The USD has lost 20% in the last 12-18 months against many currencies. I'm getting screwed because the actions of a country I have no say in are systematically devaluing their currency, which happens to be the 'standard' pricing unit of the internet. There's not much I can do about either. So two forces beyond my control are conspiring to make me earn less for the same amount of work. That's getting screwed in my book.
The value of the products/services is exactly the same. It's the pricing units that are changing, and changing fast. People inside the USA don't notice this because they earn and consume in USD, until they start looking at a trip somewhere else. Importing companies haven't really started to adjust prices yet, but the day is coming soon when imported items really start to jump in price.
Is there an alternative to trying to control inflation? Well, QE doesn't control inflation, it creates it. If you're going to accept that a central bank should have pricing power over money, then you have to accept the tools they use to create inflation and disinflation.
My stance is that stable monetary periods are periods of growth and prosperity. All paper currencies eventually reach their net worth - which is zero. The USD is one of the longest lasting currencies in the history of the world, but nearly 100 years ago it was given over to a central bank, and nearly 40 years ago it was turned into a purely paper currency. In that time period it has lost nearly 95% of it's value. While that stimulates certain types of economic activity, my personal belief is that the bad has probably outweighed the good.