Inflation: The Inconvenient Truth and the Quest for Financial Liberation
Vidhya Sagar Jeevendran
Tech Advisor for Startups & Enterprises | Fintech | AI | Cloud Strategies | Low Code Development
Over the past three years, the US has witnessed a substantial increase in money printing.?The Federal Reserve has increased the money supply by more than 50%, and this has led to a sharp rise in inflation.?In March 2022, the US Consumer Price Index (CPI) surged by 8.5%, the highest rate in 40 years.?This inflationary pressure extends beyond the United States, affecting other countries utilizing the US dollar as their foreign reserve.?When the US devalues its currency, it raises the cost of imports for other nations, subsequently contributing to inflation and impacting their exports.
Malaysia's Inflation Situation:
Various countries have experienced severe inflation, with Turkey serving as an example, facing an inflation rate exceeding 60%.?Malaysia has also been affected by inflation, with a March 2022 inflation rate of 2.8%, the highest in two years.?Rising food and energy prices are the key drivers of inflation in Malaysia.?The surge in US inflation has adverse effects on Malaysia, increasing the cost of imported goods and services while diminishing export opportunities.?In comparison, the Bank Negara Malaysia (BNM) has only increased the money supply by an average of 5.6% per year in the past three years (~15%).?In theory, if one country increases its money supply significantly more than another country,?it could lead to a depreciation of the currency of the country that printed more money relative to the currency of the country that printed less.?But in the case of Malaysia (or any other country), the local currency has actually weakened against the US dollar in recent years.?I don't know whether to call this 'Financial Terrorism' or to say the U.S. has 'smartly managed' to export their inflation on a global scale to every other country while most countries are only?blaming their government and politicians ignoring these facts.
The Need for Dedollarization:
There is a growing need for a new global transaction system that reduces dependence on the US dollar.?The current system's instability and politicization pose challenges to global economic planning and impede fair economic practices.?Dedollarization would create a more stable global economy by reducing the dominance of the US dollar and promoting economic stability worldwide.
Challenges and Progress in Dedollarization:
Despite the benefits, dedollarization faces significant challenges.?The US dollar's entrenched position in the global economy makes it difficult to transition to a new reserve currency.?Additionally, the US government has a vested interest in maintaining the dollar's status as the world's reserve currency due to its influence and control.?However, countries such as China, Russia, and India have been actively working on alternative payment systems, signaling progress in the dedollarization movement.
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Importance of Currency Identity:
The importance of currency identity cannot be?overstated.?Just as a nation's flag represents its identity, the currency symbol holds similar?significance.?Respect for and promotion of local currency symbols are vital in upholding a country's economic and cultural?identity.?It was a realization that struck when I observed my own marketing and the graphic team at RinggitPay , a local business providing digital payment solutions in Malaysia's local currency, the?ringgit,?interchangeably using the dollar symbol in place of our local currency?symbol.?This experience highlighted the need to prioritize and emphasize the use of the ringgit symbol in our graphics and?transactions,?as it is essential to preserve the unique cultural and economic aspects embodied by our local?currency.?By recognizing the significance of currency symbols and promoting their accurate?usage,?we contribute to the preservation of our nation's identity and reinforce the importance of local currencies in the global financial?landscape.
Conclusion:
US inflation poses a global problem, with far-reaching impacts on countries using the US?dollar.?The need for dedollarization is apparent, aiming to create a more stable and equitable global economic?system.?Furthermore, respecting currency identity and utilizing local currency symbols are crucial in preserving a country's economic and cultural?heritage.?By embracing and honoring local currency symbols, we can foster economic independence, celebrate diversity, and create a more inclusive global financial?landscape.
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