Lebanese central bank devalues currency by 90%

The central bank of Lebanon has announced that it has devalued the Lebanese pound by 90%. Has Bitcoin’s time truly arrived?

Lebanese central bank governor Riad Salameh announced on Tuesday that the new official exchange rate for the Lebanese pound (LBP) is 15,000 pounds per U.S. dollar, to take effect from 1 February.

This is a 90% debasement from the official rate that has been in effect for the last 25 years. However, according to an article on Reuters, this devaluation still does not come close to matching the unofficial rate on the “parallel market” of 57,000 pounds per U.S. dollar.

The Reuters article only discussed the impact of the devaluation for the commercial banks. Salameh was quoted as saying that in order to account for the impact, the banks would be given 5 years in which to “reconstitute the losses due to the devaluation”.

The IMF, like a buzzard hovering over its prey, has told Lebanese authorities to just deal with the $70 billion in financial sector losses. The Lebanese ruling elite are currently in discussions with the IMF for a $3 billion bailout. How much suffering will have to be imposed on the Lebanese population in order to swing the deal is anybody’s guess.

The Lebanese people already have to cope with the banks’ imposition of withdrawal controls, which are severely restricting their ability to take their own money out of the banks in order to survive.

Opinion 

It is to be wondered just how much financial suffering it will take before people realise that the traditional monetary system is deeply, deeply flawed, and is set up in a way that transfers their wealth away from them and into the hands of the ruling elites.

One of the mantras of central bankers is that 2% inflation is where we all need to be, and they supposedly engineer all their rate rises and cuts in order to hit somewhere very near to that figure.

Of course, the basket of goods that is used to measure inflation can never be trusted to stop going up in price. Therefore over many years the central bankers take the more troublesome items out of the basket and insert new ones whose price does not go up so fast.

The website “http://www.shadowstats.com/” is a good source for tracking how inflation figures have been manipulated in this way over many decades. 

One further food for thought is that even if central banks are able to keep inflation at 2%. Just 2% inflation a year over the lifetime of a generation is enough to steal 50% of its entire wealth.

In the current crypto bear market, Bitcoin lost as much as 77% of its value. Given its recent recovery, this has reduced to 66%. Even if Bitcoin should fall again and perhaps go as low as $10,000, the potential upside of a new bull market might make this a very interesting alternative to holding fiat currency in the bank.

Of course, it is very debatable, but surely a rise in a store of value that is completely outside of the traditional monetary system could be preferred to the 100% certainty of fiat currency trending down to zero.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Source: https://cryptodaily.co.uk/2023/02/lebanese-central-bank-devalues-currency-by-90-percent-bitcoin-anyone