Crypto currencies, gold and silver are skyrocketing in merging market countries. Why? Well, this trend will continue until it engulfs the entire world. Most of us know by now that Venezuela and Argentina are having currency crises. Now Turkey is starting to join them. It looks like Pakistan and Brazil is not too far away. What is happening in these countries and why is crypto, gold and silver exploding?
The ultimate explanation is that all governments mismanage their finances and currencies. Governments never control their spending and budgets. Temptations always exist to spend more than they can bring in through productivity and taxes. Too many promises are made that are unrealistic and not affordable. When this happens and given enough time, crises always follows. Most " Merging Market" nations have borrowed U.S Dollars. This economic strategy seems logical when the U.S. Dollar is weak and the global economy is expanding. What happens however, if the U.S. Dollar strengthens and the global economy slows down? No one ever thinks about this possibility.
The truth is that the global economy is slowing down. The world relies on a debt based economic platform. For it to work, people (and governments) must continue to borrow money and spend it. Well that is "great" until 1. you have to pay back the money that was borrowed or 2. you are no longer able to borrow anymore money. Both are happening now on a global scale. There IS TOO MUCH DEBT that people and governments have taken on. The amount of borrowing is so high that the money CAN NEVER be paid back. Bankruptcies have started.
Let us take Turkey for example. The Turkish government has borrowed a lot of U.S. Dollars. The Dollar has since risen in "value" compared to the Turkish Lira. Now Turkey owes more Lira to pay back the loan. Turkey's exports have not increased enough to make up the difference. Problems start to arise. Add now the starting of Turkey inflation and the citizens start to panic. Perhaps they withdraw money from their banks (cash). Perhaps they start buying goods at a store to save from prices rising over the next two to three weeks and BAM. The crisis begins. This is in full swing in Venezuela and Argentina is 8 weeks ahead of Turkey. The trend is growing. In the countries mentioned in this article, the citizens are buying crypto's, gold and silver to stave off hyper inflation.
Once inflation starts, in a country, it is virtually impossible to stop. People panic and do what ever they can to preserve their wealth/savings. When their country's currency is falling like a knife, the only other option is crypto's, gold or silver. These three are assets/money that is outside of governments control and the banking system. It is the only antidote for a falling currency. How does this effect the rest of us that live in a country that still has a working currency? Here is how.
Venezuela, Argentina, Turkey, Pakistan, Brazil and other countries are having trouble paying back their international loans. Banks that have lent the money are now worried of getting paid back. These same international banks are now starting to stop lending money to merging market nations since they are nervous about default. This tightening of lending will start a global chain reaction causing other nations to begin having currency crises. Can you see how the dominoes start to fall?
The bottom line is this. The time to accumulate alternative money assets is before your country starts to have inflation and a currency crises. Get your crypto's, physical gold and silver now. Think of these three as currency insurance or inflation insurance. Just ask how many in Venezuela, Argentina and now Turkey wish they had some Bitcoin, gold or silver right about now.
images from: newsforturkey.com, transascity.org