4 ms·

Floating currency only matters when you buy stuff from someone else who deals in a different currency. Although you sort of right in that "globalization" could

• msandford 11y ago
  > Floating currency only matters when you buy stuff from someone else who deals in a different currency The idea that the currency floats can also mean that the buying power consistently decreases. As the purchasing power decreases if you're in cash you lose wealth, even though on paper you're maybe even growing the number a bit. If you own productive assets this is OK because you can increase the price of your outputs faster than your inputs. Meaning you can give people raises (but more slowly than the currency depreciation) and you'll still make money. If you're an employee instead of an employer, though, you're paying the higher prices before you get the raise to be able to afford them. In this way it's possible for the central bank to perform an effective (though non-obvious) redistribution of wealth.
• leaveyou 11y ago
  "The floating currency ONLY matters when.." but the increase in money supply matters ALWAYS (especially if it's not your supply of money being increased).