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The devaluation of a currency is often regarded as a bad thing by economists, in part because it discourages saving and investment. In the words of John Maynard Keynes, a British economist: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency… [he] was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” If the devaluation of a currency is bad for those who hold it, it must follow that slashing the value of loyalty-scheme points is bad for frequent flyers. Many airlines are resorting to this trick to boost margins as oil prices rise and competition in the skies increases. Recently, the number of miles required to buy many flights has increased by 45% on Qatar Airways and 30% on Japan Airlines. Six of the 10 American airlines surveyed by WalletHub, a consumer website, devalued their miles last year. Samuel Engel of ICF, a consultancy, told the Los Angeles Times earlier this year that the devaluation of miles is starting to look “like the hyperinflation of Zimbabwe or Venezuela.” Now many are warning that the move could blow up in the industry’s face.
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