The Myth of Fiat Currency Diversification

A comedian on the Communism Channel was saying "Inflation is a problem! You should diversify! Buy Euros and stocks in corporations outside the USA!"

All countries have a fiat debt-based monetary system. The Federal Reserve inflates the dollar, with the profits going to politically connected insiders. Similarly, central banks in other countries inflate, benefiting insiders in those countries.

When a comedian says "The dollar is going down in value relative to the Euro!", they really mean "The dollar is inflating faster than the Euro!" A dollar investment will underperform gold over time. Similarly, the Euro and other fiat currencies will underperform gold over time.

When you buy shares of stock in a US corporation, you don't get full allodial title. You can't prevent management from paying themselves huge salaries or squandering resources. The corporation has a State-licensed monopoly/oligopoly, and the cost of inefficiency is passed on to customers as higher prices and shareholders as below-inflation returns. If you buy shares in a non-US corporation, you have the same problem. All large corporations have the same inefficiency; it's an inevitable consequence of the Principal-Agent problem, when someone controls resources that they don't own. For this reason, the stock market will underperform true inflation over time.

All countries have a corrupt economic system, as bad as the USA or worse. Buying paper assets in foreign countries is just as pointless as buying paper assets in the USA.

You'll never see a mainstream media source say "Buying gold and silver, and taking physical delivery, is your best protection against inflation." They'll advise gold mining stocks, foreign currencies, foreign stocks, but never physical gold.