What do Old People and Fiduciary Coins Have In Common?
It's hard to stimulate older people to do anything new or change the way they did their things – and that's understandable. Fiat currencies now have these same attributes with our elders. Here's how.
A recent study by Alice Leng of Bank of America Corp. revealed that foreign exchange – or forex, which essentially means the exchange or conversion of one currency for another based on the values of each participating currency – now responds to shocks in the market so less significant. Even when the foreign exchange market reacts significantly to shocks, it's usually not supported for a long time. It may take six times the effort it took 15 years ago to create volatility in the foreign exchange market, writes Leng in a note published Monday (October 9th). Low volatility in the foreign exchange market is evident According to Bloomberg, its volatility is 12% lower than its five-year average.
The recent low volatility of fiduciary currencies is in contradiction with Bitcoin, which has been criticized for its high volatility. Just about the central bank or the securities management agency globally warned that people should be cautious about Bitcoin and other digital currencies mainly because of their volatility. But, surprise, surprise, the fiduciary currencies have not always been stable. Take a little history of US dollar volatility as a case study.
The US Dollar
A good way to check the history of US dollar volatility is to check the US Dollar Index. The US Dollar Index tracks the value of the US dollar against the values of a basket of six international currencies. Maintained by ICE Futures US, Inc., the US dollar index is averaged geometrically and tracks the value of the US dollar against the euro, the Japanese yen, the pound sterling, the Canadian dollar, the crown Swedish currency and the Swiss franc.
Chart of the US dollar index since November 1985. Source: tradingview.com
Of course, this is a huge chart and it's hard to get anything out of it.First, I'd like to point out that, for the purpose of this article, we will associate volatility with significant and significant declines in the value of the US dollar. the value of the US dollar, since it is generally the main objective during the discussion of the flight
The graph above represents the decade between 1985 and 1995. The major sign of the volatility of the US dollar during this decade was in the overall decline in the value of the dollar between 1985 and 1987 – around the period that the debt crisis in Latin America hit. During those years, the US dollar index rose from about 124.99 to 85.42, a decrease of 31.7%. The value of the dollar has not quite increased in value for the rest of the decade, on a global basis.