Inflation is one of the worst scourges of the modern world. With our interconnected and highly complex economy and its huge amount of ever-increasing variables, it gets more and more complex.
Under the current setup, the signals for a devaluation to take place in the largest economies seem to be consolidating.
Our hyperinflation process was so brutal that it wiped off any mortgage debt I had, and my money that was in the local equivalent of the 401(k) after 17 years of hard work.
Now, in my mature age with two elders needing medicines and a child, jobless (yes, the industry where I used to work is not there anymore), I am finding everything increasingly hard.
I don´t want that happening to anyone. We don´t deserve it, plain and simple.
The bias to mask this inflationary behavior can be too much. That´s why we have to learn to read the signals and have a plan.
Accurately predicting the effects of a dollar devaluation in 2025 is a complex task, and impossible to do in such a limited space.
Nevertheless, we can analyze the potential impacts of such an event based on historical experiences, economic models, and current market trends. Most importantly, we can take some measures to protect against it.
What is a devaluation and why does it occur?
A devaluation is an intentional decrease in the value of a currency relative to others. Governments often resort to this measure to stimulate exports, reduce imports, and combat inflation. The causes of a devaluation can be diverse: imbalances in the balance of payments, expansive monetary policies, economic crises, or speculation in financial markets.
Hint: having goods, preps, and other supplies (like home canned food, spices, and other staples like olive oil, sea salt, and similar ones) is a very good method to shield yourself against inflation. Daisy also recommends precious metals as a hedge against inflation.
Possible effects of a dollar devaluation
- Inflation: A devaluation typically generates inflationary pressures as imported goods become more expensive. This can erode consumer purchasing power and negatively affect those with fixed incomes.
- Countermeasures:
- Don´t hoard paper money. Get assets that will generate revenue in the future instead. Like consumables for a business if you own one.
- If you decide to store value in the form of precious metals, be very cautious and put together a trusted trade network to work with. Otherwise, you could get in trouble with scammers or thieves.
- Don´t rely on LEOs to keep you safe. Budget cuts on police departments can motivate varmints to get out of their hideouts.
- Increase your OPSEC.
- Countermeasures:
- Balance of payments: In principle, a devaluation can improve the balance of payments by making exports more competitive and reducing imports. However, if external demand is inelastic, the effect may be limited.
- If you produce something unique or have unique skills, this will work in your favor. Like the guys in our Andes mountains producing blue and blackberries and barley for their crafted beer! They add a lot of value and offer excellent products at fairly competitive rates. The devaluation of our currency actually made them even more competitive and attractive to foreign markets.
- Interest rates: Central banks often raise interest rates after a devaluation to control inflation and attract capital. This can make credit more expensive and slow down economic activity.
- Countermeasure: Don´t get into debt if you can avoid it. I know, it´s easier said than done. But unless your income can manage the additional load of the interest, don´t do it if you don´t expect some profit out of the money you borrow. For instance, a new well pump with a price you can´t miss; or a pallet of batteries at a discount.
- Think twice before purchasing things like a new car. Sure, you may be getting something reliable for the next 5 years, but the loss of value is overwhelming. Research the brands and what you may need.
- Economic growth: The effects of a devaluation on economic growth are ambiguous. In the short term, it can stimulate economic activity by boosting exports and production. However, in the long term, inflation and uncertainty can create a less favorable investment climate. And that is the exact effect we´re experiencing right now, with a huge impact on our lives. Any foreign investor will see their money disappear in the black hole formed by the financial infrastructure that made possible to disappear billions of dollars, like the Odebrecht case
- Labor market: A devaluation can create both winners and losers in the labor market. Exporting sectors and those that compete with imported products can benefit, while other sectors may be affected by rising costs. It is wise to do business with or get jobs in those companies.
- Investments: A devaluation can generate uncertainty among investors and lead to a capital flight. This can weaken the currency even further and make it difficult to finance the economy.
- External debt: Countries with high external debt denominated in dollars will be negatively affected by a devaluation, as the real value of their debt will increase.
Impact on different economic sectors
- Export sector: Exporting companies would benefit from a devaluation, as their products would become more competitive in international markets.
- Importing sector: Importing companies would be negatively affected, as production costs would increase.
- Financial sector: The financial sector could experience volatility and greater risks, especially if the devaluation triggers a financial crisis.
- Consumers: We consumers would be affected by the increase in prices of imported goods and, possibly, by higher inflation.
- Countermeasure: Produce as much as you can. Even if that means only getting seasoning herbs. It´s a start. Don´t store paper money.
Which countries would be most affected? Countries that would be most affected by a dollar devaluation are those that have a high dependence on imports from the United States, significant external debt denominated in dollars, or an economy strongly integrated with the US economy.
How Venezuelans Coped with the Effects of Hyperinflation: 2017-2023
The hyperinflation that plagued Venezuela between 2017 and 2023 was an unprecedented economic phenomenon in our recent history. The accelerated loss of the currency’s value, the scarcity of basic goods, and economic uncertainty forced Venezuelans to develop a series of survival strategies to face this crisis.
Mechanisms of Popular Adaptation
- Dollarization of the Economy:
- Dollar transactions: Informal dollarization became a widespread practice. We Venezuelans began using the US dollar as a reference currency for purchases and transactions, especially in the informal sector of the economy.
- Saving in dollars: Many citizens sought to protect their savings from the constant devaluation of the bolivar, opting to accumulate dollars in cash or in bank accounts abroad.
- Underground Economy:
- Bartering/Trading: In the face of shortages and price instability, bartering became a common way of exchanging goods and services.
- Informal markets: Numerous informal markets emerged where basic necessities were traded, often at higher prices than official ones.
- Cryptocurrency trading: Many unemployed people have installed crypto miners in their homes.
- Family Production:
- Self-consumption: Many families were forced to produce their own food in home gardens or by raising small animals to ensure their subsistence. Backyard chickens and hens are not seen now as “lower class” things. Go figure. LOL.
- Crafts and services: The development of artisanal skills and the provision of small-scale services became a source of income for many people. Cakes, bread, takeout lunches, fried chicken, hamburgers, and all types of sweets and beverages are now valid forms to make ends meet. Sewing, cobblers, and other crafts are appreciated. Even knife repairing.
- Migration:
- Mass exodus: Millions of Venezuelans emigrated to other countries in search of better economic opportunities and quality of life. This mass migration relieved pressure on the country’s internal resources, but also generated a deep humanitarian crisis. Most of the migrant crowd are rootless: no home, no real state, and no education. Nothing to lose, indeed.
- Community support networks:
- Cooperatives: Community support networks and cooperatives were strengthened, allowing Venezuelans to access food, medicine, and other essential goods at more affordable prices.
- Neighborhood groups: Neighborhood groups were organized to share resources, knowledge, and mutual support.
Social and Economic Impact
Hyperinflation had a profound impact on Venezuelan society, generating:
- Extreme poverty: Millions of Venezuelans fell into extreme poverty, with difficulties in accessing food, medicine, and basic services.
- Social inequality: The economic crisis exacerbated existing inequalities, benefiting primarily those with access to dollars and international networks.
- Deterioration of public services: Lack of economic resources led to the deterioration of public services such as water, electricity, and transportation.
- Breakdown of the social fabric: Hyperinflation generated a climate of uncertainty and distrust, weakening social and community ties.
Venezuelans demonstrated a great capacity for adaptation and resilience in the face of adversity, developing creative strategies to survive in this extremely difficult economic environment.
However, hyperinflation has left deep scars on Venezuelan society, and our economic and social recovery will be a slow and complex process.
Final Reflections
- Hyperinflation is a devastating phenomenon that can have long-term consequences for an economy and a society.
- Informal dollarization and the underground economy are common adaptation mechanisms in economic crises, but can also generate informality and make it difficult to measure economic activity.
- Mass migration is a frequent response to economic crises, but also poses significant challenges for both the countries of origin and destination.
- The importance of community support networks and social solidarity became evident during the crisis.
The effects of a dollar devaluation in 2025 are difficult to predict and will depend on an array of economic, political, and social factors, both domestically and internationally. While a devaluation can generate short-term benefits for some sectors of the economy, it can also have negative long-term consequences. However, it is possible that this presents to some degree.
Disclaimer:
Please note: this is NOT intended to be a free financial consulting article. It´s the story of how we could manage the blows received when the induced inflationary process hit us and the subsequent crisis.
My family and I surely appreciate any donations, especially these days: health issues with our elders and no insurance are hitting us very hard.
What a timing, when we are at the beginning of the most important transition of our history, to recover our democracy.
Stay tuned, and be safe!
What are your thoughts?
Do you think such a devaluation could occur in the US? If so, would the results be the same? What differences would you expect?
Let’s discuss it in the comments section.
About Jose
Jose is an upper middle class professional. He is a former worker of the oil state company with a Bachelor’s degree from one of the best national Universities. He has an old but in good shape SUV, a good 150 square meters house in a nice neighborhood, in a small but (formerly) prosperous city with two middle size malls. Jose is a prepper and shares his eyewitness accounts and survival stories from the collapse of his beloved Venezuela. Jose and his younger kid are currently back in Venezuela, after the intention of setting up a new life in another country didn’t go well. The SARSCOV2 re-shaped the labor market and South American economy so he decided to give it a try to homestead in the mountains, and make a living as best as possible. But this time in his own land, and surrounded by family, friends and acquaintances, with all the gear and equipment collected, as the initial plan was.
Follow Jose on YouTube and gain access to his exclusive content on Patreon. Donations: paypal.me/JoseM151
19 Responses
Inflation ist eine dem System eigene, durch Produktion und Reproduktion auch im Finanzsektor hervorgerufene Profit Generierung. Was sie hier beschreiben ist nur Ausdruck des Kampfes gegen Inflation. Und dieser Kampf wird wie beispielhaft für das Gesundheitswesen an den Symptomen ausgeführt, nicht an den Ursachen. Die Ursache finden sie nicht in der Börse oder auf eine Finanz Bank. Denn die Ursachen für Inflation sind im kapitalistischen System selbst zu suchen. Und wenn sie sie gefunden haben, werden sie feststellen das sie antagonistisch (unlösbar) sind. Das Kapital ( seine Eliten) sucht seine Schulden einzulösen und findet nur eine Lösung, Krieg! Deshalb habe ich eine Kurzdefinition für euch in den USA dieses System betreffend.: Kapitalismus = Krieg- Wideraufbau- Krise- Krieg! Das ist ein unlösbarer Widerspruch!
Ich habe auch die hälfte meines lebens unter inflation und beinahe-hyperinflation verbracht, Jürgen. Normale bürger können sich in ihrem täglichen leben nur verteidigen, indem sie versuchen zu überleben, indem sie einige der von ihm bescchriebenen methoden anwenden, verstehen, wie das spiel funktioniert, und sich daran anpassen, weil wir darüber hinaus nicht viele möglichkeiten haben. Leider ist es realität…
Bleib sicher.
Jürgen, du sagst „die Ursachen der Inflation sind im kapitalistischen System selbst zu suchen“ und
„Das Kapital (seine Eliten) sucht seine Schulden zu tilgen und findet nur eine Lösung: Krieg!“
Sie haben ein fehlerhaftes Verständnis von Wirtschaft. Inflation ist per Definition die Ausweitung der Fiat-Geldmenge durch Gelddrucken. Von der Regierung geschaffene digitale oder tatsächliche Dollars erhöhen das Geldangebot, und diese Geldinflation verringert die Kaufkraft des Dollars. Alle Wirtschaftssysteme der Länder, auch die kommunistischen/sozialistischen, verwenden eine Währung. Geld ist per Definition ein Tauschmittel. Die Preise für Waren in einem Land, ob sozialistisch oder kapitalistisch, werden durch die Menge an Geld ausgedrückt, die für den Kauf eines Produkts benötigt wird. So viele Dollar zum Beispiel für ein bestimmtes Produkt. Eine Erhöhung der Geldmenge führt jedoch aufgrund des Gesetzes von Angebot und Nachfrage zu einem Anstieg der Preise. Das Gesetz von Angebot und Nachfrage ist universell und gilt nicht nur für kapitalistische Systeme.
Und deshalb Ihre Schlussfolgerung: „Kapitalismus = Krieg – Wiederaufbau – Krise – Krieg! Das ist ein unlösbarer Widerspruch!“ ist ein non sequitur. Ihre Fakten sind unkoordiniert.
Dear Jurgen,
We haven´t had a war in over 200 years in South America. I mean a real one. And in most of them, commies have been involved. The duality Capitalism/communism is already a tiresome one. It is already worn and ragged. The facts described come from my personal experience, which have taken a toll on our health and lives, as well as in the ones of million of my countrymen. The real cause of our inflationary process was the greed of the thugs running the “government”. Mind you, they lost an election with over 7.3 million people AGAINST THEM and refuse to get out…and the only “war” is happening right now in Catatumbo (Colombia) because the guerrilla stole a few tons of white powder. Not too much capitalism or other similar stuff involved. Plain crime. Hilarious. LOL.
Thanks for commenting!
Excellent article, this is the kind of warning and advice most people should pay close attention to.
Everything hangs on the economy and finance, when those go down everything else changes in governments, sociey and people´s life.
The middle always bear the brunt of failed states and policies. It´s a true SHTF, not as glamorous as a Mad Max but it´s real, it´s cyclical, and it can happen suddenly.
Dear Fabian,
Thanks. Actually, I got into prepping while looking the means to become financially self-reliant and an early retirement. Later on I realized (with the geopolitics that Uncle Hugo managed) that we were headed to a collapse, which indeed started when he died. The rest is history.
Good advice for 2nd and 3rd world country (like, for example, Venezuela) citizens.
Not very relevant to the reserve currency printers&holders – thermonukes will fly before Almighty Greenback is dethroned.
No hyperinflation in the old&good USA – creeping single-digit/low double-digit inflation only.
Imported goods shortages and diesel rationing are very possible, though.
Good points, no doubt the government will defend the position of the USD in any way it can.
However, not even nukes can fight the forces of the market, both internal and external. And tbh, I doubt they’d resort to that. Wars, no doubt – we’re already in WW3 but things won’t be like the two previous wars.
Anyway, there are many other forms in which the USD can lose value. Interest on the debt must be paid, even the US cannot default on its obligations or else the scenario described by Jose would take place, unequivocally.
So the government will keep doing what governments always do, which is print money to pay that and everything else. It will buy its own debt. That will work until it won’t, so here too Jose has a valid point as well.
That’d mean the end of it and what would nukes do for that?
Of course they can come up with other crazy stuff but that dynamic is well known because it has happened countless times throughout history, even to empires.
Something will be done to kick the can once more, like in 1971 when the US was bankrupt and Nixon cancelled the USD/gold convertibility. There were wage and price freezes, surcharges on imports, all the things governments do, and then we’re back to what Jose talks about in this and other posts.
Either way, it have a price in the American standard of living, that price is growing bigger and bigger with the rising debt and the money printing, and that’s how the US ceases to be the First World.
Dear x-soviet:
Dude! God forbid an hyperinflation in the US.
South America would take a huge blow. As well as the rest of the world. But I do receive some information that inflation is present.
Thank You J.G. Martinez D for this excellent article. I am sorry for the pain you have suffered because of the government abuses of the monetary system in Venezuela.
In the US the only real money worry is inflation. The biggest cause of the current inflation there is the crooked globalist puppet Joe Biden. His massive social spending and green new deal scam spending etc will be hurting people for years. Newly elected president Javier Milei of Argentina has done a great job fighting inflation, improving the economy and making Argentina great again. Free markets releasing the power, energy and minds of the people from the socialist/fascist bureaucrats in Argentina is what is happening. Donald Trump will be doing the same thing in the United States. It will be a massive task but with the support of the people I believe it can be done.
My only advice to people besides yours of course is to support free markets, remain active politically and not to give up. If your only political point of view is what can the government give you then you might as well migrate to Venezuela and see what that idea got people. Socialist/communist economies are centrally planned economies run by dictators and an army of bureaucrats. Regardless of their claims to serve the people and to fairly distribute the fruits of their labors to them, this concentration of power in short order results in an abuse of power where the people exist to serve the government instead of the other way around. The economic pie shrinks in turn for everyone except for those at the top.
Dear John Adams,
Thanks you!
This part of your statement “Free markets releasing the power, energy and minds of the people from the socialist/fascist bureaucrats in Argentina is what is happening” is accurate as a .308 Remington at 50 meters.
Jürgen Karsten says:
Inflation is a system-specific way of generating profit, also in the financial sector, through production and reproduction. What you are describing here is just an expression of the fight against inflation. And this fight is being carried out on the symptoms, not on the causes, as is the case with the health system. You won’t find the cause in the stock market or in a financial bank. The causes of inflation are to be found in the capitalist system itself. And when you find them, you will find that they are antagonistic (insoluble). Capital (its elites) are trying to pay off their debts and can only find one solution: war! That is why I have a short definition for you in the USA regarding this system: Capitalism = war – reconstruction – crisis – war! That is an insoluble contradiction!
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Fabian O. says:
I also spent half my life under inflation and near-hyperinflation, Jürgen. Ordinary citizens can only defend themselves in their daily lives by trying to survive, by using some of the methods he described, understanding how the game works and adapting to it, because we don’t have many options beyond that. Unfortunately, it’s reality…
Stay safe.
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John Adams says:
Jürgen, you say “the causes of inflation are to be found in the capitalist system itself” and
“Capital (its elites) seeks to pay off its debts and finds only one solution: war!”
You have a faulty understanding of economics. Inflation is by definition the expansion of the fiat money supply by printing money. Digital or actual dollars created by the government increase the money supply, and this monetary inflation reduces the purchasing power of the dollar. All countries’ economic systems, including communist/socialist ones, use a currency. Money is by definition a medium of exchange. The prices of goods in a country, whether socialist or capitalist, are expressed by the amount of money needed to buy a product. So many dollars for a certain product, for example. However, an increase in the money supply leads to an increase in prices due to the law of supply and demand. The law of supply and demand is universal and does not only apply to capitalist systems.
And therefore your conclusion: “Capitalism = war – reconstruction – crisis – war! This is an insoluble contradiction!” is a non sequitur. Your facts are uncoordinated.
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Google translation
Hi, Daisy. The stalker/hacker keeps removing your site from my phone. 🙁
I keep renewing again and again. No fooling. They must not want me reading your wonderful articles.
Veleda if you have some virus problems on your phone I have some suggestions,
1. Restart your phone. This disables some viruses.
2.Get the latest OS version update. This also disables some viruses.
3.Go to your permission manager and block any apps that you don’t recognize.
4.Research anti-virus apps and install one.
Hi. Thanks for your help. Knowledge is power. I live off the grid. This phone is my lifeline. When it was down completely my sisters were flipping out as they are at least a four hour drive away and not just any vehicle can get down my road.
You are very welcome Veleda. Since your phone is your lifeline another phone that you can call your backup phone would be a good idea.
You can get a Tracfone Samsung cell phone at Target for example. Samsung phones have a good reputation. I would recommend that brand even if you have to pay more. If you go the minutes card route know that Tracfone has a rule that if you do not use your phone for 6 months you lose your number and all of your minutes. Or you could go the monthly subscription route and the Tracfone fees are very reasonable. If you do get a Tracfone phone then your phone is locked to the Tracfone service. Unlocked cell phones allow you to switch cell phone companies but they cost more. And of course if you get a cell phone from a different cell phone company it would be locked to that cell phone company. Always ask if the phone is locked before buying.
A protective case for the phone in case you drop it is also a good idea. Otterbox is a good brand of cell phone cases. Anker is a good brand for a portable cell phone charger. A cigarette lighter cell phone charger would be a good idea too. Just make sure you have the right connectors for your phone.
No phone can be a disaster. How do you get help if you have no way to call for help?
I wonder how inflation is different in countries that have more of a debt based system of money expansion verses countries that expand via currency?
Hello spud. Too much debt is never a good idea and there is no short easy answer. For the below discussion by inflationary I mean prices increase and deflationary means prices decrease.
The problem is not whether going in to debt is inflationary for a country or not, it is why is the country going into debt, what will it do with the money borrowed and how will the debt be paid back. In the short term debt is inflationary, prices increase. But if the money borrowed is spent wisely and results in a stronger economy then when the debt is paid off the net effect will be deflationary. Deflationary by definition because a stronger economy means scarce resources are being managed more efficiently resulting in a higher quality of life for the people. A higher standard of living means more goods and services can be purchased with less labor than before. If the net amount of currency is relatively the same as before once the debt is paid off, then more goods and services available with the same number of dollars in circulation means lower prices overall. The law of supply and demand at work.
Debt spent foolishly that is eventually paid back is inflationary in the beginning because of the increase in the amount of money in circulation and inflationary in the end because while the net amount of currency is relatively the same as before the foolish spending by the government means that the government has more than likely ruined the economy and so now the economy is weaker than before. A weaker economy by definition means the economy is less efficient resulting in a lower quality of life for the people. A lower standard of living where fewer goods and services can be purchased and thus requiring more labor than before. In short the country got nothing for the money they borrowed and now they have to pay it back with the economy worse off than before,
What works in the micro works in the macro. If someone borrows heavily and spends it on a bad investment the net result is that person is poorer. A country of course has many more financial tools at its disposal.
In the case of the United States Donald Trump is saying the right things about making the economy stronger. The cost of goods and services must go down. Private investments must increase to make the economy more efficient and thus reducing the costs of goods and services. Private companies following the laws of supply and demand are what will make the economy stronger not Biden’s green new deal policies, spending and regulations that he said will create high paying green jobs. Any government created jobs are essentially a tax and a cost burden, not a way to make an economy stronger. Consumers via the pricing mechanism in the free market tell private companies what they want and how much they want those products and services. Consumers willing to pay higher prices for a product and buying more of a product means higher demand for that product. Private companies in turn will produce products based on the law of supply and demand.
Anyone who thinks socialism is better than capitalism is badly misinformed and naive. Socialism by definition means the government owns and controls the means of production.
Consider the number two economy in the world, Communist China. But is it really a communist country? If Mao Tse-Tung the father of communist China was alive today he would have all of the leaders there shot. The CCP (Chinese Communist Party) calls their version of communism free market socialism. A classic oxymoron. The Chinese communists gave up on communism decades ago and instead gave a form of ownership and control to the people to get the benefits of capitalism but without giving up complete control. In reality the communist party are the owners of everything. In short they are not communists but fascists. They have a fascist economy. People have nominal ownership and control of their businesses, but the government at any time can step in and tell them what and how they should run their business. The main rule is be productive and obey CCP rules, especially censorship rules and you will do well.
You might like the below source for more information on economics.
http://www.mises.org
Be ready for the possibility of a radical appreciation in the price of gold as part of the US attempting to turn around its debt.
It’s been rumored for some time, is picking up steam. Talking a huge revaluation if it follows through.
Depending on who is talking, from $10,000 to $27,000 per oz. Central banks have been vacuuming it up worldwide for the past several years, Silver too, a lot of its value due to market forces finally overcoming the concerted repression of its price. A lot more is consumed by the military than they want us to know, and their usage is a one-way ticket. Same goes for the huge amounts in nuclear power plant control rods. Solar panels & new silver-based batteries that smoke lithium and any others I know of are encroaching, shortages have been in effect over the past several years with worsening* on the way.
*Depends on how a person looks at it. (How much silver one already holds.)