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How Fake Money Saved Brazil

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Re: How Fake Money Saved Brazil

#121

Post by eru »

lkjuhygthyujk wrote: post #109
pavlov wrote: post #20

Heh. I always assumed that the name of the currency, real, has the meaning "royal". Instead, it's literally the same as the English word. What an interesting story. Have any other governments suffering from high inflation tried this? Instead of calling it a fictional unit, they could also just use an existing currency like the euro for the transitional period, then switch to a new national currency that has an initia…

I believe Germany did in the late 1930s but for other reasons the Reichmark didn't quite end up as the world currency they wee hoping for. You can decide to peg your currency against a more stable one eg west Africa and the French Franc - but unless the owners of the hard currency have some political reason to support your then you have to persuade the world's traders that you flobble-bead is actually worth a Euro.

Germany did introduce the Rentenmark to replace the Paper-Reichsmark in the mid-twenties to stop hyperinflation. (Later on they--essentially--reverted the name of the currency back to Reichsmark.)

There was no hyperinflation in the 30s. The early thirties saw depression and deflation. This Weltwirtschaftskrise lasted longer in the US than in Germany and is known as the Great Depression, there. The crisis contributed to the rise of Nazism in Germany, though.

Re: How Fake Money Saved Brazil

#122

Post by lkjuhygthyujk »

eru wrote: post #121
lkjuhygthyujk wrote: post #109

Earlier quoted context omitted.

I believe Germany did in the late 1930s but for other reasons the Reichmark didn't quite end up as the world currency they wee hoping for. You can decide to peg your currency against a more stable one eg west Africa and the French Franc - but unless the owners of the hard currency have some political reason to support your then you have to persuade the world's traders that you flobble-bead is actually worth a Euro.

Germany did introduce the Rentenmark to replace the Paper-Reichsmark in the mid-twenties to stop hyperinflation. (Later on they--essentially--reverted the name of the currency back to Reichsmark.) There was no hyperinflation in the 30s. The early thirties saw depression and deflation. This Weltwirtschaftskrise lasted longer in the US than in Germany and is known as the Great Depression, there. The crisis contributed…

I think there was a tiny little bit of hyperinflation in Germany in the 20-30s. IIRC the exchange rate was 1,000,000,000,000 Mark = 1 Reichsmark

Re: How Fake Money Saved Brazil

#123

Post by artsrc »

devmonk wrote: post #114
asmithmd1 wrote: post #96

Earlier quoted context omitted.

The Fed bought up 1 trillion in mortgage debt and no one blinked -- that is why mortgage rates are 4%. If China started dumping their T bills the Fed would just buy them up. It wouldn't hit like a train -- more like a tricycle.

But the U.S. can't do that forever without inflation, because they either have to cut spending (which wouldn't happen due to fears it might affect unemployment and the economy), raise taxes (same deal, and is even more of a political mess), or print money. Printing money in bulk over and over leads to inflation. Inflation causes people to slow spending.

They are printing money to directly manage interest rates and indirectly manage inflation. If the Chinese liquidate the debt they own, the Fed printed money to buy the debt, and Chinese spent the money employing americans eventually that might cause wage inflation. That process seems slow enough that inflation would be no big deal to manage.

Re: How Fake Money Saved Brazil

#124

Post by eru »

lkjuhygthyujk wrote: post #122
eru wrote: post #121

Earlier quoted context omitted.

Germany did introduce the Rentenmark to replace the Paper-Reichsmark in the mid-twenties to stop hyperinflation. (Later on they--essentially--reverted the name of the currency back to Reichsmark.) There was no hyperinflation in the 30s. The early thirties saw depression and deflation. This Weltwirtschaftskrise lasted longer in the US than in Germany and is known as the Great Depression, there. The crisis contributed…

I think there was a tiny little bit of hyperinflation in Germany in the 20-30s. IIRC the exchange rate was 1,000,000,000,000 Mark = 1 Reichsmark

Yes, there was hyperinflation in the early 20s, but _not_ in the 30s. (See http://en.wikipedia.org/wiki/1920s_German_inflation for some information in English. If you speak German, or can live with Google translate, then there's lots more material available.)

Why do you keep mentioning the 30s?

Re: How Fake Money Saved Brazil

#125

Post by pradocchia »

krschultz wrote: post #104
brc wrote: post #70

Earlier quoted context omitted.

The party was had, the hangover must be endured. Bad investments were made, they must be liquidated and written off, and these are deflationary. True inflation (not the manipulated government statistics) is really a measure of the market. To say that inflation is at the wrong value is to say the market is wrong. The Fed has been striking matches for a while now trying to get inflation to catch on and stand by with th…

I love people who argue "the market is always right" and then conviently ignore what long term interest rates are saying right now.

I'm out of the loop. What are long term interest rates saying right now?

Re: How Fake Money Saved Brazil

#126

Post by lkjuhygthyujk »

eru wrote: post #124
lkjuhygthyujk wrote: post #122

Earlier quoted context omitted.

I think there was a tiny little bit of hyperinflation in Germany in the 20-30s. IIRC the exchange rate was 1,000,000,000,000 Mark = 1 Reichsmark

Yes, there was hyperinflation in the early 20s, but _not_ in the 30s. (See http://en.wikipedia.org/wiki/1920s_German_inflation for some information in English. If you speak German, or can live with Google translate, then there's lots more material available.) Why do you keep mentioning the 30s?

I'm a CS not a historian I thought the Weimar republic was 1930s

In 2000 years of history that's only an error of 1%

Re: How Fake Money Saved Brazil

#127

Post by eru »

lkjuhygthyujk wrote: post #126
eru wrote: post #124

Earlier quoted context omitted.

Yes, there was hyperinflation in the early 20s, but _not_ in the 30s. (See http://en.wikipedia.org/wiki/1920s_German_inflation for some information in English. If you speak German, or can live with Google translate, then there's lots more material available.) Why do you keep mentioning the 30s?

I'm a CS not a historian I thought the Weimar republic was 1930s In 2000 years of history that's only an error of 1%

I take it you mean 10%?

Anyway, there wasn't much Weimar Republic to go around in the 30s. It ended in '33 with the Nazis coming to power. (The term Weimar Republic is just a name historians have made up for that period. Officially Germany was called Deutsches Reich from 1871 until 1945.)

Sorry, I am just a bit annoyed, because I have heard people make this very mistake more than once. I guess I am equally ignorant about, say, Chinese or Vietnamese history.

Re: How Fake Money Saved Brazil

#128

Post by [deleted] »

noelchurchill wrote: post #120
panacea wrote: post #16

Earlier quoted context omitted.

I think you need to listen to the audio podcast version before you disparage the style of exposition they use. The Planet Money folk unashamedly try and explain economic current affairs and stories as simply as possible. It's essentially their self professed raison d'être and they do a good job of it. Quibbling about the the accuracy of their simplified examples is missing the trees and the forest.

You're welcome for the layup opportunity to score some easy points. This serves as a good reminder that you will be swiftly punished on HN for making a comment that doesn't add value. In my defense, I didn't miss the trees and the forest. I was merely pointing out that the story was dumbed down, as you put it, "as simply as possible." And replying to a post pointing out their overly simplified math. Seriously, implyi…

[deleted]

Re: How Fake Money Saved Brazil

#129

Post by lkjuhygthyujk »

eru wrote: post #127
lkjuhygthyujk wrote: post #126

Earlier quoted context omitted.

I'm a CS not a historian I thought the Weimar republic was 1930s In 2000 years of history that's only an error of 1%

I take it you mean 10%? Anyway, there wasn't much Weimar Republic to go around in the 30s. It ended in '33 with the Nazis coming to power. (The term Weimar Republic is just a name historians have made up for that period. Officially Germany was called Deutsches Reich from 1871 until 1945.) Sorry, I am just a bit annoyed, because I have heard people make this very mistake more than once. I guess I am equally ignorant a…

+-5 years in 2000years of German history ;-)

Sorry, I had thought the hyperinflation + general chaos led directly to the rather unpleasant party seizing power in 1933 and so assumed the bad times were immediately before then (ie 1930-1933). Hadn't realised they were actually a decade earlier.

Re: How Fake Money Saved Brazil

#130

Post by dsspence »

hnal943 wrote: post #115
dsspence wrote: post #68

Earlier quoted context omitted.

What part of the New Deal is 'oddly' happening again? $300 billion of the $862 billion dollar stimulus were either tax cuts or credits. Here is a link seemingly debunking that guise of an academic study: http://www.openleft.com/showDiary.do?diaryId=10644 Fair warning it might cause cognitive dissonance.

..."refundable" credits to those who don't pay taxes. In other words, welfare.

You mean those too poor to own a house so they don't get the John-McCain-8-house-ownership-tax-credit?
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