Thursday, May 18, 2017

Commodity and the USD

Commodity and currency are inversely proportional to each other in theory. For the discussion, we treat gold and oil as commodities and USD as the currency. Commodities are fixed in supply to some extent but currency supply can be politically manipulated.

Today most countries want to depreciate their currencies by printing money excessively. When we have excessive money supply (as more money chasing the same commodity in fixed supply), we should have hyper inflation, but it does not happen for many reasons.

Most text books on this subject have to be rewritten and the college graduates can ask for refund from the colleges. :)

No comments:

Post a Comment