Have you ever played a shell game?
Typically there are three shells/cups with a single ball under it. You win by picking the cup with the right ball under it.
Think of all of the world’s assets are placed under cups. Each cup has a dollar value on top of it with enough cups to cover every dollar in the world. Now imagine if somehow you could add more cups by adding more dollars to the playing field. You’re not adding assets, just making more cups to “muddy” up the playing field.
That’s what’s happening here. We’re watching a large shell game where assets are being shifted around with the most powerful and well connected tracking the “ball” and when the game gets called they’ll pick the correct cups with the most assets and everyone else holding dollars gets to fight over the remaining cups with little or nothing left.
I hope this is a good enough analogy to convey the general idea of the screwing we’re about to see happen.
The analogy I use:
Each nation has a total value. Currency evenly divides up that total value into equal representations thereof. As the total value of the nation changes, the value of the currency (as representation of a fraction of the total) changes inversely. Ideally, the mint/central-bank adjusts the available currency in sync with change in national value: as total wealth increases, currency should increase to keep the per-unit value stable. A little inflation/deflation may be desirable to keep money flowing.
The problem is when significant inflation occurs (and likewise with deflation): injecting lots of new currency into the economy steals value from the existing currency, “teleporting” that value to whoever receives the new currency.
And that’s where I usually left it.
But now we have _two_ currencies in the mix: the ruble (fiat), and gold (commodity). And I’m gonna have to think about that one, coupled with your shell game version.