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Have you not heard of the countless fiat currencies that hyperinflated out of existence? Just because you haven't lived long enough to see a major empire fall

Have you not heard of the countless fiat currencies that hyperinflated out of existence? Just because you haven't lived long enough to see a major empire fall doesn't mean it won't happen eventually.

whatever1 4y ago
If China prints 100x RMB tonight will you stop buying their services or products? No. You will keep injecting their economy with whatever valuable asset you have to get your stuff. Inflation is just a symptom not the cause of an economic collapse. If inflation is also something that is everyone's problem then my thesis is that it is nobody's problem.
- scottiebarnes 4y ago
  You're missing the part where people abandon the RMB as a store of value and Chinese bonds become worth nothing. They become worth nothing because people realize the central bank will inflate away the future value of any RMB, and thus holding RMB or any asset that derives value from future RMB (including stocks in businesses whose revenue or dividends are in RMB) become worth nothing. Good money is supposed to be a good store of value as well. If RMB cannot store value, people will not use it. If people do not use it, it becomes worthless.
  - whatever1 4y ago
    That is the nice thing about government. They can enforce things. So even if you don't want RMB if the government pays you with RMB then you take it. That means that banks, contractors, employees etc all get RMB. Government can also force trade parties to trade with its own currency, like Russia does today.
    - scottiebarnes 4y ago
      Didn't seem to work out for Zimbabwe, Hungary, Venezuela, etc.
      - whatever1 4y ago
        For failed states why do you have the expectation that their currency (Fiat or otherwise) will not collapse? Venezuela was stripped of its manufacturing capabilities with the exit of foreign investment due to sanctions. Their former petroeconomy now is worth nothing. The intrinsic value of their currency is lost, as the Venezuelan gdp in absolute terms disappeared. Currency exchange rates is the least of their problems. They are out of value. Not out of valuable cash.

Have you not heard of the countless fiat currencies that hyperinflated out of existence? Just because you haven't lived long enough to see a major empire fall doesn't mean it won't happen eventually.

whatever1 4y ago

If China prints 100x RMB tonight will you stop buying their services or products? No. You will keep injecting their economy with whatever valuable asset you have to get your stuff. Inflation is just a symptom not the cause of an economic collapse. If inflation is also something that is everyone's problem then my thesis is that it is nobody's problem.

scottiebarnes 4y ago
You're missing the part where people abandon the RMB as a store of value and Chinese bonds become worth nothing. They become worth nothing because people realize the central bank will inflate away the future value of any RMB, and thus holding RMB or any asset that derives value from future RMB (including stocks in businesses whose revenue or dividends are in RMB) become worth nothing. Good money is supposed to be a good store of value as well. If RMB cannot store value, people will not use it. If people do not use it, it becomes worthless.
- whatever1 4y ago
  That is the nice thing about government. They can enforce things. So even if you don't want RMB if the government pays you with RMB then you take it. That means that banks, contractors, employees etc all get RMB. Government can also force trade parties to trade with its own currency, like Russia does today.
  - scottiebarnes 4y ago
    Didn't seem to work out for Zimbabwe, Hungary, Venezuela, etc.
    - whatever1 4y ago
      For failed states why do you have the expectation that their currency (Fiat or otherwise) will not collapse? Venezuela was stripped of its manufacturing capabilities with the exit of foreign investment due to sanctions. Their former petroeconomy now is worth nothing. The intrinsic value of their currency is lost, as the Venezuelan gdp in absolute terms disappeared. Currency exchange rates is the least of their problems. They are out of value. Not out of valuable cash.