09-05-2010, 09:18 AM
At the most basic level, currency is devalued when more of it becomes available (i.e. it is printed out of thin air backed by nothing, like gold or an increase in agricultural or industrial production capacity).
Another reason a currency is devalued is because a country takes loans beyond its capacity to settle them and this is when state bank kicks in to devalue the currency by setting the exchange rate.
Either way devaluation of currency is a way of imposing taxes on her people as it results in loss of wealth / purchasing power of the people.
In my opinion it is the most effective way for the elite to enjoy the fruits of labor of the other lower class.
Another reason a currency is devalued is because a country takes loans beyond its capacity to settle them and this is when state bank kicks in to devalue the currency by setting the exchange rate.
Either way devaluation of currency is a way of imposing taxes on her people as it results in loss of wealth / purchasing power of the people.
In my opinion it is the most effective way for the elite to enjoy the fruits of labor of the other lower class.
