Currency Weakness Categories

Michael Saylor explains how currencies globally are weakening at different rates, creating distinct tiers of currency strength and stability.

Current Global Currency Situation

• First time in 30 years that broad money supply in US and Europe is collapsing at >20% rate
• US Dollar dominance has increased from 30% of currency trades in 1980s to 90% today
• EU formation tied European currencies to dollar, creating unified currency behavior

Three Currency Tiers

1. Strong Currencies (Tier 1)

   • About 20 rich countries
   • Weakening at same rate as US dollar
   • Still maintaining relative stability

2. Weakening Currencies (Tier 2)

   • Most global currencies fall in this category
   • Losing 20-40% more value against dollar
   • Experiencing significant but not catastrophic decline

3. Collapsing Currencies (Tier 3)

   • Weakening 80%+ against dollar
   • Examples: Lebanon, Zimbabwe, Argentina
   • Complete currency collapse
   • No viable business strategy works in these environments

Impact on Investment Strategy

• Traditional investment strategies don't work in weakening currency environments
• Example: Argentine peso went from 1:1 with USD to 150:1 on black market
• Success in strong currency regions can mask underlying currency weakness
• Many investors misattribute gains to stock picking rather than currency weakness
• Currency weakness creates urgent need for alternative stores of value
• Critical to forecast money supply expansion for next 8 years before making investment decisions
• Historical pattern shows 6% annual currency value loss as baseline

Key Takeaway

• Form opinion about rate of currency value loss
• Use this to determine appropriate asset strategy
• Higher expected currency weakness should lead to more aggressive hard asset acquisition
• Lower expected weakness allows for more traditional strategies