Hyper Inflation - what happens to money in the bank

Discussion in 'Currencies' started by Ipv6Ready, Dec 4, 2018.

  1. SlyGuy

    SlyGuy Active Member

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    Correct. ^^^
    Savers and fixed income ppl are doomed with inflation and debtors rejoice. This is why major companies carry at least some debt and expand or buy other companies... instead of just purely buying bonds and building up cash reserve with their profits. They are playing all sides: inflation/deflation, good/bad economy. They win regardless.

    Working people and companies do with ok with inflation since their wages or prices can just rise. The retired people are the ones really smashed.

    As was said, money being in the bank or under a mattress doesn't matter much, though... it all loses substantial buying power in a hurry during inflationary times. If inflation or hyper occured, you would want to spend any currency you had asap ("cash is trash") for non-perishables or something that will enhance your productivity and future earning power or something that can preserve the buying power. By the time most ppl realize that, it is usually too late, though. Good luck buying gold once at a fair price in that currency once inflation is rockin and rollin.

    ...That is what I kinda view gold (and to a lesser extent, silver) as: basically a world money and store of wealth. I imagine my gold as a big mixed pile of various countries' paper currency that also keeps up with inflation (over time, but not necessarily day-to-day). You can sell a gold coin or bar in basically any region of the world for fair value, and that is pretty damn nice. It is interesting to consider your gold's value not so much in paper numbers... but in buying power. How many ounces of gold to buy a decent car? To buy a house? To buy a year's groceries? Those figures tend to hold up, and they aren't affected too much by inflation.
     
    Last edited: Dec 14, 2018
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  2. Ag bullet

    Ag bullet Well-Known Member

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    ^^this.
    people comment on the rising price of gold saying gold is becoming more valuable. i counter them saying that maybe the value of the gold is the same and the value of the fiat is going down hence why you need more of it to purchase the same amount of gold. they usually respond with a blank stare.
     
  3. Pirocco

    Pirocco Well-Known Member

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    Not in the case the inflation bringing side (central planning) drives up/down the gold price by buying / selling it when speculators do so.
    And that, post last real gold standard always been, has been / is the case.
     
  4. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Just because the US Fed bailed out the banking system in 2009 with ease, there is now an assumption that every G20 country central bank has the ability to do the same.
     
  5. Glenis

    Glenis Member

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    That's not necessarily true. Many G20 countries have now included bail-in laws. In NZ we have a very clear bail-in, we don't even have an amount of 'safe' deposits ie some countries allow $250k before the bank helps itself. https://rbnz.govt.nz/regulation-and-supervision/banks/open-bank-resolution . Most of these countries are less keen on the taxpayer coping the cost of a bail-out. A depositor is an unsecured creditor and a fast and easy target to pay for the sins of the banking system.
     
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  6. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Bail-in by depositors is new to me. In my opinion, the existence of a safe amount is actually to assure depositors and to deter bank runs. Sometimes the bank itself maybe solvent, but a bank run will cause a liquidity crunch and cause the bank to dump assets at depressed valuations.

    If I’m not wrong, in Singapore, the safe amount is funded using a national deposit insurance scheme that the bank pays premium on an annual basis. It is not a government guarantee. In a way, it is still being funded by depositors and shareholders.

    Unlike Australia and NZ, Singapore actually faced a real financial crisis in 1997, although not widely reported. The details of the bailout or restructure is not known to the public. There wasn't an Internet then so there wasn't a lot of information avenues other than IRC chatgroups and the national newspapers (in Singapore, all news is owned by the government). Before the financial crisis, there were 6 separate local banks in Singapore, POSB, DBS, OCBC, UOB, OUB and Keppel Tat Lee. After the restructure and bailout, there were only 3 banks left - DBS/POSB, OCBC and UOB. If there were another financial crisis, maybe we'll be left with 1 or 2 banks? :D
     
    Last edited: Dec 27, 2018

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