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Old 06-25-2012, 07:12 AM   #1
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Fiat currency: Belarus edition

"My friends here tell me that, last summer after another bout of devaluation, it became nearly impossible to purchase euros and dollars. The currency was falling too rapidly, and no trader was willing to take the risk. Even the central bank stopped exchanging its reserves.

Consequently, small businesses in Belarus couldn’t get their hands on the hard currency they needed to pay foreigners for imported goods. Store shelves, including groceries, emptied quickly.

And people took whatever savings they had and traded it for anything they could find– sugar, toilet paper, ironing boards… you name it. As I’ve been told, hand tools were especially popular as a store of value in some parts of the country."
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Old 06-25-2012, 09:53 AM   #2
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....classic. Exactly my childhood memories from then-communist Poland. Official price controls prevent the runaway inflation, but legal money, printed in truckloads (in response to wage rises demands) is practically worthless. There is no free-market price discovery, because gubbermint puts price controls in place, to fight inflation from going up => any STUFF that you could get your hands on, is being perceived as worth much much more than it's official price tag attached => everything disappears from the shelves, before it even gets there (and this is not a figure of speech, people were bribing shop clerks to tell them when they expect the next delivery, and if the stuff was in any demand at all, it would get sold on it's way from the truck to the shop shelves). And I literally mean EVERYTHING - food, clothing, shoes, freaking TOILET PAPER was a hot commodity. Imagine shops, lined with EMPTY shelves, the only two items that we never ran off, for some reasons, was a vinegar and canned peas. So, this was the stock of the shops, whenever you go. Dollars/Deutsche Marks skyrocket on the black market, perceived as the only viable stores of value (hello, of tomorrow). You could buy anything on the black market, or in the government-controlled "PEWEX" shops - only, you have to pay in dollars (or equivalent) - in the black market, price discovery values hard currencies two orders of magnitude higher than the "official" exchange rate (that you would have been offered in PEWEX shops). Corruption/black market/bribery, pass as a new "normal". Well, we came a long way from the 80's now, but still, the generation that grew up in such a pathological environment, are our "leaders" today... With the only answer in their minds to any of our current problems, as they've learned back then: "look what the West is doing, they cannot go wrong"

Move along, nothing new to see here for us, eastern-europeans
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Last edited by bushi; 06-25-2012 at 09:55 AM.
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