The FIAT system is broken and steal value and acquisitive power from you (us), that is a reality. But the other face of the coin is that is the system that rules the world today. Drop USD and escape to Bitcoin, invest, buy gold, etc. are the recipes that some yell to the world, however, in the main cases are people that live in developed countries and have a nice wealth backing them. Liked or not, the US dollar (and Euro in a second line) is a tool for protect wealth in most of the undeveloped countries with weak economies and political instability.
Yes, the world is changing and sometimes we miss all the signals. Other times we see the signals of what we believe is an imminent transformation and this never comes or results in the opposite we bet. The truth is that nobody knows for sure at 100%, but we can diversify options to minimize the risk of loss and maximize the opportunity or make it.
Let's take for example some actual real cases and try to figure out it, but first I will clarify something: Even if you don't like it, you always have to check the political situation and decisions in your country. The “I don’t get into politics” mantra can cost you wealth and life comfort. Of course, there are cases where there is no escape from the hit don’t matter if you see it coming, but for sure it will be a softer impact if you create conditions before. After things happen every looks obvious, but is a hell of a decision to take the risk when you only have a slight feeling about things based on certain behaviors of your country's economy.
Now, developing the idea that the US dollar is a tool for protect wealth in undeveloped countries I will take some nation's examples and put the situation in context.
Argentina
The history of Argentina with the IMF is turbulent, most Argentinian hate IMF but sadly always there are politicians who borrow money from the IMF and the chaos breaks out. After paying all its debts and remaining free of them in 2006, Argentina under the presidency of Mauricio Macri agreed on a new loan with the IMF in 2018, the biggest of the country's history, to supposedly shore up the national economy (in crisis) and the Argentinian peso (in devaluation process).
The result? If in 2017 one dollar was equal to 16 Argentinian pesos, by 2019 was around 50. After assuming the government, Alberto Fernandez was unable to pay the IMF debt, the reserves of the Argentine Central Bank go to negative numbers, being forced to ask for money from other funds or institutions to pay the IMF debts.
In August of 2022 the US dollar cost 135 pesos, by today (a year later) one dollar cost 350 pesos.
Cuba
The Cuban economy is in crisis for more than 35 years, one time harder than others but always marked by the totalitarianism and repression of the government. After restarting relationships with the United States government, between 2014 and 2017 the national economy receives a fresh air breath. But, again, the government makes bad investments with the public treasury (maybe intentionally for laundering purposes) focusing in build hotels that remain empties and not investing in agriculture production. By 2020, when the covid-19 hit, the country was without incoming sources and with food production in red digits.
I will omit the sanitarian catastrophe that the island suffered and focus on the economy.
That situation leads to a small devaluation of Cuban peso and the start of the inflation process, of course, if you don’t have production that is what happens. In that condition people start to buying US dollars in a shy way as a medium to protect their money. However, the Cuban government has still another disaster to make and force a process called Tarea Ordenamiento (Ordering Task) that in just a day devalued to half the pesos savings of the entire country. People were unable to withdraw the dollars that have saved in bank accounts and the banks stop selling USD, suddenly the value of the dollar in the free (black) market skyrocket to 50 Cuban pesos from a former value of 25.
I remember that I alert my know people to start saving in dollars or Bitcoin, but few of them listen to me. For my part, I exchange all that I could, but with an average national income of only 40 US dollars at the moment it was not so much.
With confidence in state and bank institutions lost, the Cuban currency started a gradual and constant process of devaluation helped by the cash shortage and other clumsy measures of the government. By the moment of I am writing this post the value of one US dollar is around 250 Cuban pesos, a 900% devaluation in just eighteen months.
Today most people chose to save in US dollars as a tool for protect wealth, and in stablecoins like USDT, HBD, or, in a less measure due its volatility, Bitcoin. And at the same time, many businesses decide to charge their products and service in that type of coin. Decisions that aggravate the loss of value of Cuban peso but understandable ones.
Türkiye
Tayyip Erdogan, president of Türkiye, wants his country's economy grows and for that launch an “economic independence war” in which he maintains the interest rates low ignoring the high inflation of the country. Of course, the authoritarianism and autocratic projection of Erdogan's government set the path free for repression and censorship of any opposition to his politics.
The Turkish Lira go from 3,8 per dollar in January of 2018 to 27,05 in August 2023. Again US dollar works as a tool for protect wealth.
Nigeria
Well, the first time I heard about Nigeria was about inflation and cash shortage, I swear it. This is a particular case, a country rich in oil and natural resources that is poor and with great economic difficulties. The problem is primarily about corruption and colluding between the politics and rich people.
Also, political instability, high external debt that consumes 100% of the country's incoming and the robbery of oil (the main source of money for the state) generate economic chaos that leads to inflation and shortages.
The inflation start climbing in 2015, but, after mixing all previous conditions and adding naira cash shortage, explode in 2022. From 420 naira in August of that year, dollars go to 766 naira 12 months later.
US dollar is a tool for protect wealth in undeveloped countries
I hope that you notice that even if you don’t involve in politics this can affect you, so is important to check frequently your local news about political and economic decisions.
As you can see, US dollar is a tool for protect wealth in undeveloped countries. The reasons are clears, is the main currency of world exchange and commerce, is the most stable one, and is by nature stronger than local currencies of third-world countries.
Why Bitcoin doesn’t do this job yet? Well, if you are a middle-class person from Europe, USA, Canada, or any other developed country, you can use Bitcoin, because you suppose to have enough liquidity to solve your daily needs and you save money for the future. However, if you live in an undeveloped country with a low income (like the majority of people in the third world) you don’t have long-time saving capacity. You will need the money soon as possible without the risk of losing 30% in a day or week; that capacity of stability and fast convertibility is only possessed by the US dollars or stablecoins based on it.