Another government currency - the Naira - is in hyperinflation, which has happened to many other fiat currencies through history.
We're all aware of Zimbabwe's hyperinflation in 2008, Argentina since 2018, Weimar Germany in the 1920s, Venezuela since 2017, and so on. In Zimbabwe, people were spending their days picking through the dirt for crumbs of gold, to pay for bread. Hyperinflation destroys economies, individuals, and societies. It is the end result of all fiat currencies in history, and it is even beginning to happen here in Canada, and in the USA. Fiat currencies are in a race to the bottom. That means real assets appear to be "going up in price"... relative to the failing currencies. For example, here is the price of gold since year 2000, price in Nigeria's Naira:
That is a classic example of hyperinflation, also known as a "hockey stick chart".
Actually, it looks more like a Stealth Bomber than a hockey stick...
Whatever you call the pattern it makes, hyperinflation causes misery for the people using that currency.
My friend @olusolaemmanuel from Nigeria commented today: "The hardship is just too much. The price of everything is increasing everyday. What you get as price today may no longer be the same in less than an hour or till the following day. People are groaning in pain due to the hardship."
Unfortunately, it usually continues to get even worse, as the currency spirals out of control to complete collapse. The government (and/or central bank) issues more of the currency, supposedly to help the people, but it causes further acceleration of the collapse. Eventually it becomes obvious a whole new fiat currency, or even banking system, will be required to bring stability. Of course, the problem is bound to happen again, because fiat currencies are backed by nothing except the demands of the issuing government.
Those holding gold (or silver etc) maintain their purchasing power in these situations. Those holding the fiat currency lose everything.
You've heard the expression "gold is a hedge against inflation". This is what it means.
DRutter
Thanks buddy for this great eye opener. I which many Nigerians here can get to see this post so they could understand and know how to leverage well on it that rather than saving in Naira which inflation will get to reduce to nothing, but it's better to buy up gold.
Food is another way to preserve purchasing power, but you already know that, because you told me the story of people buying food today to avoid the price going up tomorrow.
I even feel this effect in Canada, with our recent inflation rate of 1% on food items. Sometimes I buy enough of something to last several months, even a year or more, when I find a good price. If the item keeps well, I store it when I can. When I run out of something I bought a year ago, and go to the store to replace it, I certainly notice the difference in price. A case of food that was $25 will now be $30 or more. Each year it's the same, and the rate is accelerating.
One thing that is unique about it now, is that ALL the world's currencies are going into hyperinflation at the same time. In the past, only 1 or 2 at a time. Now it's the whole global system. I think this is happening by design, to justify a new financial system being created, that will benefit the globalist elites even more than the previous one has.
Hmm, I like the way you answer and give solution to issues. It shows you high level of intellectual prowess, not just in academics alone but also about the world
I understand more now, most especially with your example it makes things more clearer. Thanks
It has happened in leaps and bounds with the dollar. Chips are now $2.49 while they used to be $1. Gas and food are so high I avoid doing certain things including entertainment to avoid going broke.
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