Why do wars tend to devalue the dollar?
(Guess)
A lot of money is printed.
Also, war is not an activity that generates wealth (but to some it does, obviously).
72% of the dollar's purchasing power was destroyed in just four episodes
21–30 of 277 posts
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#22Why do wars tend to devalue the dollar?
Money printing and expensive bonds?
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#23This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…
It could also be a play to squeeze China or similar nation dependent on middle east oil. USA semicon production not ready, if there were signals that China was ready for a play on Taiwan maybe this is a gambit to buy some time.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#24[flagged]
Pretty close to the 80/20 rule of thumb.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#25Why do wars tend to devalue the dollar?
Wars usually involve the destruction of assets. If the same amount of money chases fewer assets, the money has less value.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#26[deleted]
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#27This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…
I think the idea is crash the stock market to force interest rate drop to refinance the massive debt.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#28> Instead, $100 in 1914 is worth $3.05 today. Doesn't that mean $3.05 in 1914 us worth $100 today?
I'm pretty sure you are right. Or to emphasize the devaluation, "$100 today would be worth only $3.05 in 1914."
I think it is astonishing that we accept that in a best case scenario of sustained 2% inflation, we are literally planning for the value of the dollar to be cut in half every 36 years.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#29Why do wars tend to devalue the dollar?
Weapons cost ALOT and do very little to increase the future economy.
It's the issue Russia is facing right now in Ukraine. Even if Putin wanted to stop, his economy has turned entirely wartime, when it ends the country crashes on itself.
Re: 72% of the dollar's purchasing power was destroyed in just four episodes
#30This supports my hunch that the current Iran war creates a lethal trifecta that could potentially cause a dollar collapse. 1. Massive military overspend. 2. Petrodollar squeeze (Strait of Hormuz). 3. Allies pulling out: Europe and the Gulf diversifying both their investments and defense purchases. #1 creates oversupply of dollars and #2 and #3 lower demand. This study supports the idea that wars can indeed destroy pu…
Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).