3 ms·
Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you c
by lrei 14y ago
Losing value and losing a part is the same thing.
Say you have 100 dollars. And with 100 dollars you can buy 100 beans:
* The dollar loses 10% value. Now you can only buy 90 beans.
* You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans.
Compare that with:
* Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money.
* Cyprus savings take a 10% cut, Euro keeps 100% of its value.
Sure it's a simplification but I think it's a valid point.
- icebraining 14y agoThe Euro losing 10% of value in relation to what? USD? Yen? And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices. When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.
- gasull 14y agoThis is not true. Currency depreciation leads to price inflation. That's why your dollars (or euros) buy less things year over year.
- icebraining 14y agoCurrency depreciation by increasing the supply is not the same as losing value relative to other currencies, which was what happened to BItcoins (since the supply is constant). And while both depreciations lead to price inflation, an loss of X% in the latter doesn't lead to an increase of the same amount in price inflation, because not all products completely depend on imports from other economic zones.