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How does your theory of fiat value explain the value of the Argentinian peso or the Venezuelan bolívar, and their changes?
by mixedCase 7y ago
How does your theory of fiat value explain the value of the Argentinian peso or the Venezuelan bolívar, and their changes?
- narrator 7y agoAll countries of the world that purchase oil and most imports need dollars to do so. All dollars are created as debt. If there's a sudden collapse in the amount of debt created because the money multiplier is destroying debt faster than it's being created, dollars become more scarce and are bid up. The Argentinan and Venezuelans can't create more dollars to pay for their oil, so they print and have to chase scarce dollars along with all the other countries. Domestic U.S banks and companies get first access to any dollars that are created. This is essentially what happened to them in the 80s during Latin America's lost decade when the U.S interest rates went up a lot.