Developing Countries: HBD Getting More Important

There was an election in Brazil and Luiz Inácio Lula da Silva was able to defeat Jair Bolsonaro. While this is not something that is going to upset the balance of power globally, it does affect the citizens of Brazil.

In reading Lula's platform, it is easy to see how he is going to follow the same playbook. Politicians never learn. Granted, there is debate whether he will get his ideas through. Yet, this is exactly what people should prepare for.

Long story short, these people fail to see (or ignore) the interconnectedness of economic and monetary matters. They simply think they can do whatever they want without major consequence.

As for Lula, his policies will set off another massive wave of inflation due to the fact the REAL will further decline against the USD.

This is obviously bad news for the people of Brazil. Fortunately, the Hive Backed Dollar (HBD) offers a solution.

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The Milkshake Theory

Brent Johnson was the first I came across promoting this idea. It is something that everyone on Hive should be mindful of. We are dealing with a global situation where capital flow is crucial. Understanding what is taking place can salvage people's accounts.

What is the milkshake theory?

Basically, it is the idea that the US Dollar, and denominated assets, is going to suck in all the capital from around the world. The events taking place globally are the straw which will then reach into other economies and pull out the money.

For example, hedge fund managers in Japan will dump their YEN based assets, convert the YEN for USD, and then purchase dollar denominated assets. This puts further downward pressure on the currency, complicating the matter for policy makers even more.

Naturally, this is not just relegated to Japan. We can see this happening all over the world. Just think of the USD and the related assets as the best house on the block. While it might be in decay, at least it is not on fire like the rest of the neighborhood.

The Power of HBD

It is easy to focus upon the 20% APR that placing HBD in savings pays. However, this is only one piece of the puzzle.

What happens if one's currency declines 10% against the USD? This means that everything in that country is 10% more expensive simply due to currency exposure. Thus, anything tied to international trade will see a price increase.

That means that, by placing some of one's money in HBD, not only does the 20% present a return, it is enhanced by the fact the purchasing power, in USD terms, is preserved. Hence, the individual can swap the HBD back to the native currency for a 10% (in this example) gain.

With we are dealing with globally, this is something everyone outside the USD should be mindful of.

HBD gives people access to the USD without actually having to get them. This is also vital since there is, globally, a USD shortage. Countries are having a tough time getting USD. Since there are so many loans denominated in this currency, there is high demand.

We also have to factor in the massive, overt corruption of some countries banking systems. These effectively are not much more than mafia-style loan sharks. Trust is almost non-existent. It is a situation that only gets worse when the government is of the same ilk as many African nations are.

This is the power of HBD. Anyone reading these words can gain access to the USD by having HBD in one's wallet. It requires no government permission or bank intervention. One can simply gain the coin through swapping other cryptocurrency or even by being active on Hive.

Either way, if one holds a small amount of money in this currency, he or she is protecting oneself from downside moves in the local currency. In some instances this can actually be larger than the APY paid out of savings.

Brazilians Should Pick Up Some HBD

Looking at Lula's victory against this backdrop shows how it is a good idea for Brazilians to park some of their money in HBD.

Lula is going to be like most politicians and try to spend into prosperity. This challenge with this is that it puts downside pressure on the currency.

If USD denominated assets start to suck money in from around the world, this will continue to add to the demand for USD. This is going to have an effect on local economies as they deal with issues of currency exchange.

Turning to HBD can be a game changer for these people. Whereas the banks might not have USD available, HBD can be acquired in the Internal Exchange. As we can see, even without much volatility in $HIVE, we see almost $200K in trading volume.

It is often best to have a hedge in place when there is uncertainty. In many of the developing nations, the inflation rates are getting out of control, mostly because of the relation to the USD.

HBD is a way to hedge against this and protect at least a portion of one's wealth.

This is something overlooked by those who deal mainly in USD. However, for those outside of this currency, getting into it might be a way to save a lot of downside pain.

HBD accomplishes this.


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Bang, I did it again... I just rehived your post!
Week 130 of my contest just started...you can now check the winners of the previous week!
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Fortunately, the Hive Backed Dollar (HBD) offers a solution.

How come?

What exactly is the supply of HBD and when we know that HBD is supposed to be a stablecoin, then with such a lower supply how can it join the international economic order.(I do not question the usefulness and/or HBD as viable alternative, but there are so many things to come to the fore before we can think about it, but yes the prospects of HBD is bright).

Second, HBD is supposed to follow USD value by definition. So even if you offer 20% APR you do not know by how much USD will depreciate to counterbalance that depreciation.

Let's hypothesize if the USD depreciates by 50%, can this 20% APR counterbalance that depreciation?

But, at an individual level, I would always tell people to bank upon HBD as much as they can instead of saving it in a bank account(4% APR) or a fixed deposit(8% APR).

Basically, it is the idea that the US Dollar, and denominated assets, is going to suck in all the capital from around the world. The events taking place globally are the straw that will then reach into other economies and pull out the money.

That's exactly the international economic order is designed for. No matter how much Fed prints, USD will not depreciate or lose value wrt to other currencies particularly the developing countries. That means Fed prints it, inflates it and the cost is borne by the other countries that are hooked upon to the international economic order.

This CBDC is just a hogwash to appear as an adoption to the new technologies and the evolving concepts of crypto, but the reality is they fear the sovereign power of Blockchain and crypto, that's they are nervous.

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No matter how much Fed prints, USD will not depreciate or lose value wrt to other currencies particularly the developing countries.

The Fed doesnt print US Dollars.

In fractional reserve banking, only commercail banks can create the currency through loans. Central Bank reserves (liabilities) are not legal tender. Hence, they are financial products for depository institutions that are pegged to the currency, in this case the USD. They are not broad economy money.

They also cannot be converted to "digital dollars". The banks could swap them out for banknotes but that would means getting the notes, storing them, and distributing to the population. At the same time, they are useless to banks because no settlement takes place in physical currency.

Hence the understanding of the international economic order is skewed wrongly since this fundamental concept is overlooked.

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Great details.

Thank you for schooling me. Engagement really widens the perspective and sometimes strengthens the fundamental concept by cutting across loosely defined things. Thank you again.

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I agree. That is the power of Leofinance. We share what knowledge we have.

When it comes to money, sadly, there is a lot of BS out there, especially on Twitter and the like. Many have a worldview that is based upon fallacy simply because people repeat the same untruth over and over.

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Something similar is happening in my country. In the just the last 3 months, the dollar has risen by 40% against our currency and about 100% in the last 2 years.
Saving money in USD and USD-pegged tokens has been the only thing keeping me going.

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People in countries affected by this understand what is written here intimately. Most in the developed world, where currencies tend to be more stable, overlook this completely.

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True. The inflation is crazier out here, cost of living is through the rough. Money that could make one rich a couple of years back is just barely enough to cover living costs.

I tend to tell everyone I know to save their money in $ or any other stable currency.
It’s insane how an investment that gives you as much as 50% annually doesn’t still beat stashing your money in $$ and doing nothing.

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What happens if one's currency declines 10% against the USD?

If only it would be 10%. Our currency, the Hungarian Forint (HUF) declined 32.58% against the USD in the previous one year (12 months).

HBD will help a lot in long term.

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Wow this is really interesting, that means for someone to buy HBD and then transfer it to saving can increase the amount without Lossing. Thanks for this amazing post it is really helpful to me

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I wouldnt say without losing. If the person's native currency appreciates against the USD, then he or she is losing value by in a USD denominated asset.

The question is how likely is that given the conditions in many countries around the world.

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That makes a lot of sense. I am working on doing what I can to have more money in some stable coins for the future. Mostly HBD of course. I have seen a couple stories about how the BTC thing in El Salvador is going. Not sure if it is all FUD or not. It kind of feels like it.

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The Bitcoin situation is interesting since it took the state to implement it. That isnt what cryptocurrency is about.

However, BTC has too much volatility especially for El Salvador. They already use the USD so they were not subject to currency fluctuation. Now they are with BTC.

It would have been better for a country that doesnt have the USD as legal tender to opt for a crypto alternative.

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Ah okay. The sad thing is people who don't know are going to point to it and say it is failing when really it wasn't implemented properly in the first place. It's just more FUD for crypto.

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I've been loving HBD! As a music creator it's awesome to be able to earn a little extra income from my work but then also stack it and start building a passive income from it as well with that 20% APR which is huge. Massive potential here for many people.

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It could be an added bonus if you are a currency that is exposed to swings in USD. Then you could further benefit by having some HBD.

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HBD offers a tremendous advantage in this situation, the hive is really well thought out from the economic point of view, any user who decides to invest here will be very safe in the face of these volatile changes in the country of Brazil. Excellent post.

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Not sure how well it was thought out as much as consistent effort and a few ideas allowed us to fall into it.

Either way, at these levels, it is working well.

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It makes a lot of sense to park some money in HBD while our fiat currencies devalue. Another thing I am picking up lately is, HBD can do a lot more in developing countries where the fiat is continuously depreciating against the USD compared to the developed nations.

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Another thing I am picking up lately is, HBD can do a lot more in developing countries where the fiat is continuously depreciating against the USD compared to the developed nations.

Without a doubt. That is the point of this article. By having HBD, one gains access to the unit of account that it offers. One is not really holding any USD or promised it. In fact, one is only promised $HIVE.

However, the common denominator is the $1. HBD can be swapped into $1 worth of $HIVE.

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Same thing happening here in Ghana. Dollar has risen from ¢7 in January to ¢16 today. Will have to save some hbd then.

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It seems the worse the economy, the more the USD is appreciating against the native currency. It is not pretty out there.

That is why HBD could help some people out. Even a few hundred will go a long way of helping to preserve wealth.

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What is happening in Nigeria doesn't give room for me to hold naira and all I want to do is my my money in USD. Hbd is my number stable because holding it comes with a juice 20% pay which is massive in the current situation of the world economy

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I havent looked at the exchange rate but I am sure the Naira is getting hammered compared to USD. There is a government that is overtfully corrupt, more so than many others.

Tough situation.

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impressive that the volume is so high on the internal dex; I remember it being only about 30k. Although it might because of the withdrawal suspension on Binance which was lifted today

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I am not sure what kicked the volume on the Internal Market. There is something that was spurring people to swap.

Perhaps you are right about Binance.

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we will see in a couple of days I think

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HBD is often overlooked from a global perspective. It's both an opportunity and an added advantage to park some of your wealth especially when USD is not your native currency.

I like to see HBD as a store of value. The 20% APR is a bonus and an incentive to hold more.

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Nigerians can tell what it's like holding a shitcoin for a currency, fiat here is practical bullshit and everybody just expects it to keep failing against the USD.

Now guess what? Banks are running out of foreign reserves, global transactions are restricted due to this, and citizens are being heavily taxed via banking services to cover what I believe is their practice of manipulating the Naira's "actual" price value.

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I dream of a government that will legalize stable coins like HBD in their various countries if they are against volatile coins. This will be an easy solution to the challenges

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Understandably, the issue is not peculiar to that country alone, Nigeria is having the same issue were USD is rising by almost 50% now.

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I think HBD can be a short-term solution but I don't think 20% would be sustainable if we had too much HBD in the savings getting interest.

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