Iceland Currency Declines 50% in One Week

The price of a cup of coffee doubled in the past week in Iceland, if you’re paying Krona, the local currency. If you’re paying in most other currencies or if you’re bartering, the price is probably the same.

This dire situtation for the Icelandic people emphasizes that fiat currencies can substantially decline in value at any time. Their value is dependent upon supply and demand, and during the past few weeks I assume the Iceland government has printed a lot of currency to “save” the banks and demand has plummeted. When the government saved the banks and the depositors, they devalued the currency of all people in Iceland, even those who kept their currency at home.

Argentina experienced a crisis in 1999. Now it’s Iceland in 2008. Will the U.S. be next?

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload the CAPTCHA.