Inflation, Printing money and Crypto crisis

The first glance and you'd feel today we are going to talk about counterfeit money! Psych you are wrong like wayy off 😆😆😆😆

What if I tell you this is real money taking you back to the Weimar Republic Germany 1923. The inflation was so bad that one loaf of bread used to cost 250 marks in January 1923 costed 200,000 million marks in November 1923.

Not just in Germany in 1923 the worst example of hyperinflation can be seen in Zimbabwe. Here is a picture just to put things into perspective!

But why this?

Since paper money has no intrinsic value and can be printed on demand by governments many experts believe that fiat currencies or simply put paper money is very fragile.

Cryptocurrencies are an appealing asset class to replace paper money because of their limited supply and transparency.

No, we are not saying that cryptocurrency is the best! Sure there are some pros and cons and maybe cryptocurrency can prove to be a safe bet against inflation and making money and it's value more regulated and stable!

BUT BUT BUT

It's not foolproof. Don't believe me? Take a look for yourself.

The Vauld Financial Crisis

SBI, HDFC, Axis Bank, Vauld. You ask what's common - They are all banks

What's different - While other banks are focused on currency and fiat money Vauld focuses on cryptocurrency.

Just like a normal bank you could deposit your cryptocurrency in Vauld. People can earn interest on their crypto deposits and also borrow loans against some collateral.

So what happened?

Vauld did not have any withdrawal limit to make sure users feel safe while depositing their crypto. That backfired against them as Investors withdrew 200 million in just 2 months heavily impacting operations such as borrowing and crypto investing.

What does it mean for all of us? Check out the complete scrolls 👇🏻

Can we print unlimited money?

A lot of people think printing unlimited money is the solution to end poverty. Think of it the pandemic happened and financial crisis struck. The solution increase the supply of money and offer free handouts.

But what happens if you start offering free money? The biggest event would be a sharp increase in the inflation which would in turn decrease the true value of money.

Even though people would observe an increase in their income and purchasing power the supply of good will be limited. And according to the law of demand and supply this will in turn increase the price of goods.

A loaf of bread which costs 20 rupees for now would suddenly sell for 2,00,000 in such a scenario.

Check out the complete scrolls 👇🏻