Global Currency Debasement!

Currency debasement or competitive currency devaluation it's happening worldwide. Today New Zealand had just cut their interest rate causing it's currency fell.

Looking nearer at home, Bank Negara had been maintaining the interest rate for pass two to three months causing the ringgit losing around 5% of it's total value. Question it's why majority of the Central Banker of the world it's devaluing it's home currency? Answer :-

1. By devaluing it's currency export products will look cheaper overseas therefore it will help the local economy to recover.

2. Global downturn had raised the prospects of recession back at home, having a cheaper currency might just help to avoid it.

3. Slowing or stagnant growth had cause great pains and uncertainty into local market by lowering down interest rates, cost of borrowing for doing business will be lower thus encourage local economy to growth.

Draw backs of having lower interest rates and subsequently debasing the local currency it's higher import cost, and it will further fuel inflation. Which currently running double digit worldwide.

By having a negative interest rates environment will cause foreign funds pulling out their funds from the local economy cause cost or profit of owning the local currency will not be attractive. Foreign Direct Investment (FDI ) it's very important to stimulate growth having it fleeing away will have a great impact on the economy.

At current scenario majority of the world Central Bankers it's debasing their own currencies rather then raising interest rates to tame inflation that will raise the local currency values.

Main problem at the moments its large number of Central Banker it's cutting interest rates for the pass few months to shore up the local economy, bringing in a scenario whereby everybody it's trying to outdo one another on having cheaper currencies by slashing interest rates!

The world Central Bankers it's having nightmare currently cause to raise interest rates to combat inflation economy will slip into recession, reducing interest rates inflation will go north pole. In short there are caught between the devil and the deep blue sea!

What they call the "perfect financial storm", raising the spectre of stagflation worldwide. High inflation plus stagnant growth.

And we have global currency debasement plus stagflation all at the same time, all fiat money values will deteriorates further indeed ..............buy gold!





Disclaimers/Comments Policy.