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Devaluation is the deliberate downward adjustment of a currency, that's very different to depreciation. Fiat currencies cannot be "designed" to lose value at a
by sixQuarks 6y ago
Devaluation is the deliberate downward adjustment of a currency, that's very different to depreciation.
Fiat currencies cannot be "designed" to lose value at a measured rate. Even bitcoin, which is actually designed with a measured addition of supply up to 21 million, cannot control its value.
- panarky 6y agoHow do you imagine devaluation works with modern free-floating currencies? The president of the central bank doesn't just announce the new exchange rate, because exchange rates are set by markets. To devalue a currency, the central bank sells a lot of it in the market. Where do they get all that currency to sell? Either by selling government bonds in the market and using the proceeds to buy foreign currency, or by printing new units of the currency from thin air and selling that to buy bonds or foreign currency.
- sixQuarks 6y agoAnd your point is? The point I was making is that devaluation is a term to describe a deliberate thing whereas a currency losing its value 99-100% over time is not.
- panarky 6y agoThey're both deliberate, and they both use the same mechanisms to accomplish the devaluation/depreciation. The only real difference is that one is fast and one is slow.