The best way to ruin a country is to debauch its currency.
– Vladimir Lenin
So, as countries around the world print money as if it is endless in supply, how can it possibly retain any value?
Printed money has no real value. It is merely a promise from a government that it will honor it. They used to honor the paper money in the US by exchanging it for the face value in gold. They don’t do that anymore. The government assures you that you can use their paper money to buy what you want and the seller will take it. As long as people have faith in the government this works just fine. What if people lose faith in the government?
This is a valid question to ponder. I believe that there is now a general mistrust in fiat currency (paper money) and people are looking to find a way to store or preserve wealth so they invest in things of limited supply such as real estate, art, collectables, bitcoin, stocks and precious metals. The point of these investments is that they have limited supply, which is what gives them value. Of what value is a piece of paper that you can make as much as you want of? That’s what most world governments are doing now.
So is a country ruined if nobody believes its currency will retain any value? What if other countries believe it has no value? As most countries depend on imports, how will they pay for them? If you are a nation that imports more than you export and the country that you import from doesn’t want your money, how will you pay them? This is how hyperinflation happens. Buckle up, you are going to start hearing that word a lot. Hyperinflation. I hope I am wrong.