Redenominating a currency

[benjamen]

Long technical read if your wish:
http://www.unc.edu/~lmosley/APSA 2005.pdf

A few take aways from the above article...

1) Wow, a lot of countries have had really bad inflation and/or had to redenominate their currencies! Turkey had double digit inflation every year from 1972 until 2004!!!

2) There is some good thoughts on the hazards of having very large denominations of your currency (tens of thousands, millions, ect). This makes me wonder why, despite the inflation in the U.S. over the past 40 years, there is are still no USD denomination over $100 available to the public.

3) Another good section talks about the hazards of letting foreign currencies circulate in your country (for the government). If the choice is available, would you choose to be paid in some other currency? This highlights a major reason I don't the legal tender laws are going anywhere.

4) It is interesting to note that democratic countries are just as likely to have inflation problems as authoritarian countries.

 

[bushi]

This makes me wonder why, despite the inflation in the U.S. over the past 40 years, there is are still no USD denomination over $100 available to the public.

Two reasons: a benign one (there's no practical need for bigger denominations of paper, on the broader scale, because for any more significant transactions - people are using these plastic things with magnetic strips on them instead, or indeed, electronic banking arrangements straight away), and a more insidious one (handily, supported by the first): it also helps to stop the word from spreading, that there's something fishy going on with your currency - after all, people would notice new bill denominations coming out every 10-20 years. Without that tangible confirmation of currency debasement, it is easier to commence it. That whole boiling frog thing, you know. Very few have the capacity and mental discipline, to line up all these things together, without being poked right into eye with the facts (and even then, if the facts are "managed" well into Joe sixpack's "normalcy bias", most people will just go into denial mode, and reject them)