The market analyst known as PlanB on Twitter, says that the average worker is actually losing money due to inflation. PlanB made the comment in a 2019 Twitter post shared on Reddit. The post is still relevant today as inflation soars to 8.5%, the highest level in 41 years.
The post which did not gain a lot of attention then is tenable today because not just fiat such as USD is nibbling away at the value of people’s savings. Some stablecoins are also being minted, sometimes without even the backing of anything, unlike the USD and most fiat. It simply says:
“Your savings are being printed away. Buy Bitcoin!”
Inflation Associated With Printing Money
PlanB drew a correlation between minting of money and inflation. He made it clear that if money were of finite value as governments project it, it would not devalue over time. PlanB also said that if minting of money and its devaluation can create wealth, that there is no reason why countries such as Zimbabwe and Venezuela would remain poor.
In their reaction to the post, @juergen_lankat said that the devaluation of money by governments never creates wealth, but moves savings from the people to the government. This, according to him is what oils the system, adding that money independent of the system such Bitcoin could change all that:
“Devaluation does not create #wealth, but transfers assets from the saver to the state to keep the system running. We will see if and how the system reinvents itself with #Bitcoin” says he.
Another comment from Crypto Hour says that in a 100 years, people would look back and wonder at what could have made national currencies attractive that it was ever used.
Another comment said that the reason some of the poorest countries find it difficult getting off hyper-inflationary trends is because, unlike the US, which has a mechanism through which she exports her inflation, these countries cannot do that. This, according to @indika1337 is because they cannot print the USD which has been the reserve currency for years.
Only scarce assets allow people to create wealth. Sound money allows people to trust & hold value that can be transferred.
People create wealth not money.
Bitcoin and litecoin allow people to build wealth for each other
— Master Ⓜ️🕸 (@MASTERBTCLTC) July 24, 2019
The Russian Connection
Since the week after the Russian invasion of Ukraine, the value of the ruble has risen over the US dollar as seen from the chart below.
The measures that the Russian central bank took includes raising of interest rate, a move away from dependence on the US dollar as a reserve currency by ordering that “unfriendly” countries pay for gas supplies in ruble. Currently, Gazprom Bank acts as a forex intermediary, converting all payments to the ruble.
Taking a cue from Russia, countries such as China, India and Israel are progressively making plans to move partly or completely away from USD.
An April 9, 2022 post from The New Indian Express was titled:
“US dollar comes under all-round attack”. According to the post,
“World’s largest countries with the biggest economies are moving away from payments in the US dollar and increasingly using local currencies for trade. Among these countries are Russia, China, India, Saudi Arabia and Iran.”
It added that the US and NATO sanctions resulted in a reverse kick by these countries.
The Crypto Connection
Even though there has been no proof that Russia used cryptocurrencies to evade sanction, some Russian Oligarchs are known to hod large amounts as evinced from the spike in intermediary deals by brokers in Switzerland. Iran has also become one of the global Bitcoin mining powerhouses.
What Does PlanB Really Mean?
The analyst is saying that saving in fiat such as the USD wouldn’t be of long-term benefit to the saver. It doesn’t matter if it’s their 401k account or regular savings account. They will most assuredly depreciate over time.
With the benefit of hindsight, if countries are thinking of exit strategy from a centralized system, savers should do so too. Also, we can seen that the concept of printing stablecoins has its own risks as seen from the LUNA/UST meltdown.
Like many Bitcoin maximalists, he believes that the coin’s deflationary mechanism beats any fiat.
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