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Never in a millions years would I have thought I would end up writing that headline one day but there it is.
The British pound has beaten Argentina’s peso to a title nobody wants: the world’s worst performing currency.
Yes, The British Pound is the worst performing currency for 2016, doing worse so far this year than any other major currency. That means it’s even worse than Argentina’s peso, which so far this year is down 11.7% against the dollar. Since voting to leave the European Union the pound has plunged 14% against the U.S. dollar. It’s down about 12% since the start of the year, and is trading at its lowest level since 1985.
If this doesn’t make your spider sense tingle I don’t know what will. People in developed countries just do not understand what it means for a currency to devaluate 5% , let alone 10 or 15%. I don’t blame them. It just isnt that common in 1st world countries. I on the other hand know exactly what it means.
There’s no free ride folks. This has devastating consequences. Its not a matter of if, the devaluation already happened and people will pay for it. They will pay it at the grocery store, older people will pay it with their pensions. For each point of devaluation, a proportional number of middle class people fall into poverty.
For those that are about to learn a lot of this the hard way, get my book “The Modern Survival Manual: Surviving the Economic Collapse” so as to minimize the blow as much as possible and get ready for what’s coming.
FerFAL
Fernando “FerFAL” Aguirre is the author of “The Modern Survival Manual: Surviving the Economic Collapse” and “Bugging Out and Relocating: When Staying is not an Option”.
4 comments:
"If this doesn’t make your spider sense tingle I don’t know what will. People in developed countries just do not understand what it means for a currency to devaluate 5% , let alone 10 or 15%. I don’t blame them. It just isnt that common in 1st world countries. I on the other hand know exactly what it means."
I disagree, this swing is not that unusual for many developed nations. Take a look at the 10 year charts on xe.com... plenty of examples. Canadian, Australian, New Zealand dollars, and even the Swedish Krona all show larger drops(and climbs) in that time; if you want to ignore the 2008 drop, there are still similar swings, and if you go back farther you will see plenty more.
Does it hurt when this happens? Yes, but it's hardly a given that it won't reverse. Plus, if you had the sense to keep any savings/investments in USD, you just got a nice boost to help offset the increasing prices.
"People in developed countries just do not understand what it means for a currency to devaluate 5% , let alone 10 or 15%. "
What?
You should look at the currency of Australia or Canada vs US. Cross border shopping for Canada to US is a huge deal (to Canadians anyway) and the prices swing all over the place. 20% value swings (both up and down) in just the last year alone.
There is constant resentment that goods made in Canada are sold in the US for a price cheaper than Canadian can buy themselves. Big ticket items like cars are thousands cheaper. So, we certainly understand it, we just don't know how to stop it.
Australia and Canada havent performed worse than the Argentine Peso. Thats a record you dont want to hold.
Also, its important to understand why a currency drops or goes up in value. If it drops because the price of oil dropped then its bad but it is natural and understandable. In the case of the GBP, it dropped becuase of lack of faith in it. Investors, companies, people with money, they are waiting to see how things go, others are leaving the market becuase it just doesnt work for them outside the EU. All this freezes the economy. Youre talking recesion.
Alot of a manipulation of the U.K, Canada, Australia and generally anglosphere currencies mainly cause they are the most stable and valuable currencies for the elite in the U.S. In the long run, they aren't losing value.
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