Fiat currency: Belarus edition

benjamen

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"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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bushi

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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, :gold::silver: 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 :rotflmbo:
 
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pmbug

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* bump *

From OP:
...
For what it’s worth, the Minsk city-center is quite nice and exceptionally clean. If not for the authoritarianism and constant presence of uniformed goons on the street, it would be a really great place to hang out. The people, particularly the youth, are engaging and friendly.

I have serious expectations that this country will one day dump this totalitarian nonsense and emerge as a resource-rich power in Europe, in no small part due to the energy of its youth.
Shit is happening in Belarus right now. Authoritarian crackdown on the populace ahead of an election. Protests growing. Civil unrest.

 

pmbug

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Thousands of students boycotted the start of the school year in Belarus on Tuesday and signs of a possible rift appeared in an opposition alliance that has led weeks of rallies and protests against veteran President Alexander Lukashenko.

Lukashenko faces the biggest challenge of his 26-year rule since claiming victory in an election last month that opponents say was rigged. Lukashenko denies electoral fraud and shows no sign of backing down despite the threat of Western sanctions.
...

Seems like this is going to be another Juan Guaidó scenario with the western world backing a leader that doesn't have the reins.
 

pmbug

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The European Union government said on Thursday that Alexander Lukashenko, who swore himself in as Belarus president in a secret ceremony earlier this week, “lacks any democratic legitimacy” after claiming victory in presidential elections in August that were “neither free nor fair.”

- The statement by EU High Representative for Foreign Affairs and Security Policy Josep Borrell, in the name of all 27 EU foreign ministers, asks that the Belarus authorities “respond positively to the demand of the Belarusian people for new democratic elections.”

- It also demands that the government “refrain from any further repression and violence directed against the Belarusian people and immediately and unconditionally release all those detained, including political prisoners.” Daily mass protests against Lukashenko are taking place in the capital Minsk.

- Before the contested election, the EU had pledged to spend €135 million on various projects in Belarus, and €53 million more to help the country face the coronavirus pandemic. It now says it is “reviewing its relations” with the country.

- Russian President Vladimir Putin, a Lukashenko ally, said last week in a meeting between the two men that Moscow would extend a $1.5 billion loan to its cash-strapped neighbor, after indicating earlier that a Russian police force was ready to help the regime if protests got out of control.

- European Commission President Ursula von der Leyen cautioned a week ago in her “state of the union” address to the European Parliament that “those that advocate closer ties with Russia” are wrong. “The poisoning of Alexei Navalny with an advanced chemical agent is not a one off. We have seen the pattern in Georgia and Ukraine, Syria and Salisbury — and in election meddling around the world. This pattern is not changing — and no pipeline will change that,” she said.

The outlook: The EU is opening a new front in its worsening relationship with Putin’s Russia. Lukashenko’s unapologetic, if secret, self-swearing-in has given an indication that he is not ready to engage with other governments to try to find a solution to the current crisis. For now, his election rival, Svetlana Tikhanovskaya, is urging the EU to direct its funds directly to those in Belarus who need them most — like doctors and hospitals. And despite his protestation of support, Putin so far doesn’t seem eager to send troops to Belarus, as he did in Ukraine in 2014. Risks that Germany might pull out of the Nord Stream 2 gas pipeline that von der Leyen alluded to may partly explain his reticence.

What a mess.
 
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