Argentina has systematically used the “printing machine” to finance deficits, evaporating the value of the local currency throughout its history. That mechanism was used so frequently that the country had five different currencies in the last 140 years, which deleted 13 zeros throughout that time.
Even more, the current peso used today, that was instituted back in 1992, represents only 0.01 pesos in purchasing power of the original one. So that makes an effective deletion of 15 zeros in the purchasing power of the Argentine currency in the last century and a half!
What our experience tells us is that when the national governments need to finance deficits, they will not hesitate to print as much money as possible to cover their short-term needs, especially if the effect of that printing emission is generating no impact (i.e. no inflation), as is the case today in developed countries.
For this reason, we have no doubt that, as a result of the current crisis, countries around the world will keep running record fiscal deficits, while the Federal Reserve and other central banks will keep buying national and corporate bonds, along with printing money as never before in modern history.
In this context, the “Argentine Economic Survival Manual” shouts that… with fiscal deficits, the highest debts ever, money printing as never before, and economic depression, any person with small or big savings should move a relevant amount of his liquidity to the only currency that cannot be printed: Gold.
When you see that in order to produce, you need to obtain permission from men who produce nothing… when you see corruption being rewarded and honesty becoming a self-sacrifice, you may know that your society is doomed.
Denna text var klippt från Göran Högbergs finanskrönika, just nu kan du köpa ett abonnemang till specialpris!
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