The main storyline most financial pundits focus on is the current imploding of the Greece economy.
However, these stories focus very little on the demise of every nation where not only debt may be an issue, but more importantly the fiat currency behind the debt.
The main storyline should simply state as a fact, Greece has no choice but to exit the European Union because their debt is unpayable. When they finally announce their plans to default on the national debt it will no doubt cause a ripple effect in the entire indebted global economy.
That might sound like a harsh statement or bold prediction but what other options would a nation have where the debt exceeds GDP (Income) by 177%. Imagine that your income was a $1000 a month yet you owed $177,000. How long do you think you could continue to borrow from one credit card to the other until your creditors caught on?
That’s just the issue in one country over its liabilities in the form of debt. If you were to look at the bigger picture of the most troubled global currencies it reveals other nations beyond Greece experiencing a monetary meltdown.
Of all the currencies valued against the Dollar the Russian Ruble has taken the hardest hit as far as its trading strength.
In the last year, according to Bloomberg financial analysis, the Russian Ruble has declined over 40% in value to a single dollar. That means every single dollar now purchases forty percent more Rubles than last year. Another way of looking at that statement, Russian citizens have lost out on a percentage of the purchasing power of their income.
Since the Dollar is the dominant global trading instrument, every single currency outside the dollar is measured against the Dollar. Therefore, when non-dominant currencies experience economic pressures for various reasons the purchasing power of the local currency is impacted.
This impact upon the currency not only affects the entire economy, but more importantly, every single household in that nation.
Below is a primary example of how a faltering currency impacts a household in Russia. When the value declines so does confidence internationally and domestically.
The pictures illustrate the primary hindrance to every household. The CPI (Consumer Price Index) or the price of everyday goods increase drastically. According to the Economics Minister, Alexei Ulyukayev, the annual rate of inflation was at 16.7% as of today (March 19, 2015).
This is an extremely high rate in the price of your everyday necessity such as food, milk, toilet paper, etc. Basically, the entire grocery basket at checkout for every family has increased significantly yet your income didn’t change.
Now look at that first picture of all the faltering currencies against the Dollar with Brazil, Norway, Sweden being in the same predicament.
Here is a question worth asking yourself. How would you feel if your grocery basket price increased 10% at checkout? Would you still have confidence in your currency?
Now is the time to learn the difference between lawful money and fiat currency.
Start your education with the free eBook: The Simplicity of Money
Learn the four monetary lessons that will change your perspective on the subject of money.