Because of inflation, our warm savings in the bank, no matter how full, are dwindling. Some finance experts like Ray Dalio we have provided very clear explanations on this subject. Until when will we trust the bank, this leech which takes so many costs from us and which proves incapable of keeping our assets intact in the face of the vagaries of life? The case of this Vietnamese will teach us much more about this carpet pull skilfully made up, the effects of which could only be felt in the most extreme conditions.
The ravages of inflation in Vietnam
For some, the story of this Vietnamese victim of a carpet pull related to fiat currency (FIAT) seems innocuous. For others, it contains a whole host of lessons to be learned in the face of galloping inflation that is currently plaguing the world.
In 1983, a Vietnamese man named Le Minh Toan was deemed prudent to entrust his savings worth 4,100 dong to the bank. He expected to benefit from it, even to use it during possible dark periods. At that time, this sum was equivalent to once in gold, enough to afford an apartment in the center of Hanoi.
20 years later, the bank returned its assets, 109,778 dongs. Great, right? But this figure is only window dressing. Inflation had been there, that stinking beast that brings us a lot of misfortune. Do you have any idea what these 110,000 dongs saved for 20 years? The equivalent of ” 3 bowls of pho “. 3 bowls of soup!
In such circumstances, one is logically looking for a culprit. We have already mentioned inflation: it reached 400% in the 1980s in Vietnam. But there is also the fact that the Vietnamese government had devalued the dong in 1985: 10 old dongs were exchanged for 1 new dong.
Imagine the disappointment of the Vietnamese, seeing their assets reduced by 90% for the time of a decree.
Winning over inflation
The inflation rate approaching 400% and the valuation of the dong have affected Vietnamese households. But that didn’t last very long.
Currently, Vietnam seems to be showing great statistics, while the United States, Europe, Lebanon and other countries seem to be diving into the red. To give you an overview of the Vietnamese situation, here is what the UOB Bank of Singapore published about it:
- achievement of a GDP growth rate of 6.5% in perspective;
- inflation rate of 3.7% in 2022, which could approach 5% in 2023.
Enough to respect the policies of the Vietnamese government, which, despite the Covid-19, has chosen to facilitate the entry of foreign direct investment (FDI) and the revival of international tourist activities.
Even the IMF seems satisfied with the prudent policies from Vietnam. HSBC, which forecast an inflation rate of 3.5% for the country, only asked for a ” normalization of monetary policy “.
In addition, we will mention the fact that the Vietnamese are friends of bitcoins (BTC) and cryptocurrencies. In 2021, didn’t Finder rank Vietnam at the top of 27 countries in the adoption of crypto assets? At that time, 41% of the population of the land of the rice fields confessed to having bought cryptocurrency.
From now on, the local players are only waiting for the regulation of the sector. Because with the proliferation of blockchain game projects, to cite only Axie Infinity from the Sky Mavis studio, Vietnam is not far from coming out of the inn, with or without inflation. Here is a beautiful lesson to which the non-coin-operated Should think in the dark times we are currently going through.
Sources: Vietnam Today; The Courier of Vietnam; Viet Nam More; Reddit
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The blockchain and crypto revolution is underway! And the day when the impacts occurred on the most vulnerable economy of this World, against all hope, I will say that I had something to do with it