Winnah wrote:Devaluation is a reduction in the value of currency.
No. Devaluation is an official reduction in the value of a currency relative to other currencies. It's a thing that happens in response to trade pressures. You are conflating devaluation with inflation, which is a completely ridiculous thing to do.
Inflation is not the same as slow and inevitable collapse, because people using the currency are also
using the currency. They put the currency in banks, they spend it, they get more of it over time. If you get raises periodically, and the money you have in the bank accumulates interest, what harm is inflation doing to you?
The Winnah wrote:Combine that with fiat currency, which has no fixed value by any objective standard, and you end up with events like the Great Depression, which saw countries actively competing to export their high unemployment levels, or in more recent times, the post GFC currency war.
You know this is completely wrong, right? Such that anti-trade policy was a thing that mattered at all in the face of the Great Depression, it was
tariffs, not devaluation that was the culprit. The Smoot-Hawley act of 1930 was a
tax increase on imported goods, not a reduction in the amount of Francs a Dollar could buy. The Great Depression was exacerbated by all the major countries trying to maintain a gold standard and keeping their currency strong, not by countries going to a fiat currency and letting their currencies get weaker.
Wikipedia wrote:The connection between leaving the gold standard as a strong predictor of that country's severity of its depression and the length of time in its recovery has been shown to be consistent for dozens of countries, predominantly in developing countries. This may explain why the experience and length of the depression differed between national economies.
Yes, countries that stayed on the Gold Standard longer had a longer and more severe depression. That's just historical fact. And it's the opposite of what you're saying, because the things you are saying are the opposite of true!
The Winnah wrote:Economic collapse refers to a severe economic depression or a breakdown in normal commerce. The number of countries that have experienced a sovereign default in the last 50 years alone is staggering. These nations deliberately defaulted on debts in their own currency.
This is probably stupider than the other things you said, which is impressive. No, a sovereign default is not the same as an economic collapse. A sovereign default is a renegotiation of some or all of a nation's outstanding loans. It may be bilateral or unilateral. It may come with an associated breakdown in normal commerce, but usually it does not.
Zimbabwe is indeed a country where the currency was devalued into nonexistence and commerce collapsed. But that is the exception. That is the only country in the world to experience anything like that in this century. Egypt had a debt restructure in 1984, but it was part of a deal to
remove sanctions rather than to devalue the currency or shatter the economy.
You simply cannot equivocate a country refinancing or renegotiating debt structure terms with true periods of economic freefall. Doing so makes you look like a tinfoil hat crazy person.
The Winnah wrote:So yes, I stand by what I said. Fiat money is not bad, nor am I suggesting that a fixed reserve currency is better. I am just saying it is not sustainable and that history happens to agree with me.
The correct response to people calling you on your bullshit is not to double down on the insanity. As virgil pointed out,
countries are temporary phenomenon. The oldest country in the world is the United Kingdom, which incorporated into the present day entity in 1707, fully 306 years ago. The
second oldest currently incorporated country in the world is the United States of America, which incorporated in 1785 and is now 228 years old. That is a bump up from third place, which the US enjoyed until 2008, when the Kingdom of Nepal disincorporated for several months and the region was newly minted as the Republic of Nepal.
Clearly, saying that "nation states are unsustainable" makes you a crazy person. But what
possible difference is there between that position and the equally insane position that fiat currencies aren't sustainable?
The Deutsche Mark no longer exists, but it didn't "collapse" or "fail", it was simply reincorporated as the Euro. There was a full trade in available from the old currency to the new, and no one who isn't a crazy person would say that the DM was somehow unsustainable or devalued or whatever just because a DM note isn't worth anything today.
-Username17