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Life in Poland - ECONOMY [43]
Złoty is going to change for the worse I reckon, going to put my earn money in crypto
That would be really stupid, IMHO. Bitcoin, and all the sh!tcoins that followed it, was created after The Great Recession of 2008. This is its first real test against a recession, and it has show what a great "inflation hedge" or "durable store of value" it really is. It's doing worse than the worst parts of the stock market, and weekly we hear of yet another project going belly up. If you hold on to your crypto, you're risking a total wipeout. I don't think crypto will ever go to zero, since drug dealers and prostitutes will always have a use for it - but a price of $200-300 is enough for this function.
The zloty ones are now worth 14% less than they were, the euro ones are worth 6% less.
All major currencies in the world are declining against the US dollar, except for the Ruble (for reasons everyone knows) and a handful of smaller currencies of commodity rich states. The reason for this decline is that the US Federal Reserve has decided to take the threat of inflation seriously, and has begun seriously hiking rates. The era of infinite money is coming to a rapid close. The 0.75% rate hike at the meeting two weeks ago, was the largest such hike since 1994. At the same time, the European and Japanese central banks have been more cautious (the ECB is looking at a 0.5% hike, which would be the biggest since the year 2000). This situation, where the US is leading the pack in fighting inflation, and others are still working under the old "infinite money" regime, is creating serious divergences in rates. If you can earn 3X more money holding US treasuries than German Bunds (I don't know what the exact number is now, just speaking figuratively), then of course money will flow into USD denominated assets.
If you want the zloty to be appreciating against the dollar, then you should also be prepared for the Polish CB to raise interest rates to 10-12%. This would mean mortgages, car payments, credit card bills, etc that are twice as expensive. It would mean a huge squeeze in investment by private capital, since bank loans would be out of reach for a lot of companies that were still able to borrow when rates were 6-7%.
