Quote:
Originally Posted by Kenu
"Coins" is incorrect and actually the opposite of what he was trying to illustrate. Rare precious metal coins on the other hand have inherent value.
"Paper money" or fiat currency is the real devil, money backed by nothing just empty promises like our current bankrupt system. The value of paper money can be manipulated by the issuing body, in Magi's case, the Kou Empire, in our case, the Fèdèràl Rèservè.
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Actually, the problem is getting indebted in foreign owned currency, be it paper or gold. Get indebted in either and you are screwed.
That is why smart modern governments use floating fiat currencies with a policy of not taking on any foreign debt. It prevents you from being currency-manipulated by bankers and foreign countries. (it doesn't stop other stupidity though)
Btw, the anime made no sense whatsoever. In a real squeeze scenario, the value of the foreign currency used is driven up (thereby making it more difficult to get hold of currency to pay back the debt). Inflation as described in the anime would just hurt the creditors who lent the money and people with fixed salaries in said money.
Edit: It is possible that what it was meant to describe is the value of foreign goods being driven up due to the local economy collapsing. But the inflation in that case would happen in a local fiat currency, not a foreign owned one. (thereby making it more difficult to use the local currency to pay the foreign debt)