Money Supply

Money Supply

Yeah, Yeah. I know. You saw this one coming a mile away with the title of the blog and everything and you've taken Economics. Cool. You're a little bit more tuned in but it doesn't take a Genius so don't get your panties in a bundle.

So right now the Dollar is pretty strong, the U.S. Dollar that is. That means if I were to put a dollar next to a bill of each currency from each country and someone were to ask me which one was most valuable i.e. which one I would pick if I could only pick one i'd say either the U.S. Dollar or the Chinese Yuan. 

If it came down to it, since i'm American i'd pick the U.S. dollar but the message i'm trying to send here is not all currencies are created equal in fact most currencies are created unequal at first and their value does not stabilize for many, many years after they are first created.

What I mean? When Europe started coining the European Euro, it took a little while for the currency to stabilize as it does with all currencies when first introduced as international forces and other currency values and exchanges are acting on the value of the Euro, among other things. In essence, it'll take time for the first euro to actually equal anything remotely considered stable in value such as say, the U.S. Dollar.

Bitcoin took a huge hit recently and the number of Bitcoins in circulation dramatically increased which sent the supply of Bitcoins way up and the value of Bitcoins, as a result, way down.The more Bitcoins in circulation the less a single Bitcoin is valued at. Basically: More Bitcoins, Less buying power. I can't buy an egg for one Bitcoin if one Bitcoin equals one dollar if someone introduces a second Bitcoin right before i'm about to buy the egg because the egg is now equal to two Bitcoins, so i'm out half an egg. However, because marketers tend to exploit such things at their own convenience i'd probably only get a quarter or fifth of the egg as the currency i'm using is unstable and potentially worthless.

Catch you on the Flip Side.