"Debasement is the act of reducing the quality or value of something. Henry VIII was behind one of the most notorious examples in history: the great debasement saw the amount of gold and silver in coins substituted with cheaper base metals such as copper to fund his lavish lifestyle as well as wars with France and Scotland. It earned him the nickname Old Coppernose when silver started to wear off the coins featuring his face."
"The modern debasement trade involves investors moving away from fiat currencies, such as the dollar, in favour of harder assets that provide safety from the risk of rampant inflation. The trade a hot topic in the markets this month is being driven by anxiety that governments will not, or cannot, rein in their borrowing by cutting spending and raising taxes."
"Concerns about fiat currencies which are issued by governments without the backing of a hard asset such as gold have been rising for years. But interest in the debasement issue has gathered pace as a result of the Trump administration's trade and fiscal policies, which have threatened to drive the already huge US national debt even higher than its current $37tn."
Investors are buying gold, bitcoin and equities as protection against potential debasement of fiat currencies driven by rising government debt and weakened major currencies. Historical debasement involved reducing precious-metal content in coins; modern concern centers on inflation and loss of purchasing power if governments pressure central banks to monetise deficits. The trade gains momentum amid large US fiscal deficits, rate cuts despite above-target inflation, and political pressure in several countries to prioritise spending over debt control. Specific triggers include US fiscal policy, central-bank independence risks, government shutdowns, budget impasses in France, and proposed expansionary policies in Japan.
Read at www.theguardian.com
Unable to calculate read time
Collection
[
|
...
]