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Setelinleikkaus: When Finns snipped their cash in half to curb inflation

jpkoning.blogspot.com

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Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#231

Post by FuriouslyAdrift »

hgomersall wrote: post #132
FuriouslyAdrift wrote: post #126

Earlier quoted context omitted.

This is the result of demographic crash and stagnation more than anything else...

You mean interest rates don't necessarily control inflation?

Japan is the worlds first steady state economy and got that way due to a sudden stagnation in trade and then demographic crash over a generation.

They've tried just about anything (except unrestrained foreign immigration or forced breeding) to jump start the economy but nothing has worked.

Inflation is effectively zero...

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#232

Post by aguaviva »

int_19h wrote: post #212
aguaviva wrote: post #194

Earlier quoted context omitted.

Appreciate the clarification. That said, I'd be curious to know why you seem to implicitly accept the Russian regime's currently stated (or reasonably inferable) terms as the only "workable" terms. Is it because you think it has that much of an upper hand in the situation (to get its way no matter what the West does in the coming months) -- or because the Trump administration will likely simply cave in to pretty much…

GP was talking about "having thrown away a workable peace deal", which in this context almost always refers to the purported peace deal that fell apart in 2022. In any case, the only other peace deal that is currently officially on the table as far as Russia is concerned is basically the same. What's actually workable in the end depends solely on how far the West is willing to go, IMO. There's no realistic scenario i…

Appreciate the detailed response, and it seems we are very broadly on the same page.

Assuming no further military push from the West -- do you think the Russian side would acquiesce to some form of "Cease fire along current lines, but no legal recognition of the territorial claims, and no lifting of sanctions or arrest warrants, and no return of seized foreign assets"?

(That's very far from my own ideal outcome, but I'm just trying to get sense of how you see the situation).

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#233

Post by int_19h »

carlosjobim wrote: post #223
int_19h wrote: post #208

Earlier quoted context omitted.

I'm not disagreeing with that part; I grew up in Russia in the 90s, where, if you had any significant amount of money, you'd have a dollar or euro account, and ideally both. This provides security against currency collapse, yes; but if the government decides to be actively confiscatory, it doesn't really help, unless their plan is particularly poorly designed.

If we're talking about physical paper money bills, then the government will not be able to confiscate these from people, they can't search every nook and cranny for something which is so easy to hide. The way the Finnish government confiscated money was by imposing rules on how their currency could be used and the value of the bills. For foreign currency, they can try to impose rules and a fake exchange rate, but the…

By "confiscatory" I mean any policies that amount to taking your money or preventing you from using it as money. With physical paper money bills, making them outright illegal to hold is actually surprisingly effective - you don't need 100% enforcement rates, just high enough to make it impractical for most people. One historical example of such a society was the USSR.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#234

Post by hgomersall »

FuriouslyAdrift wrote: post #231
hgomersall wrote: post #132

Earlier quoted context omitted.

You mean interest rates don't necessarily control inflation?

Japan is the worlds first steady state economy and got that way due to a sudden stagnation in trade and then demographic crash over a generation. They've tried just about anything (except unrestrained foreign immigration or forced breeding) to jump start the economy but nothing has worked. Inflation is effectively zero...

Exactly, but read many macro textbooks and they will tell you that interest rates control inflation. You've eloquently described a counter example and made the point I was trying to make.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#235

Post by int_19h »

aguaviva wrote: post #232
int_19h wrote: post #212

Earlier quoted context omitted.

GP was talking about "having thrown away a workable peace deal", which in this context almost always refers to the purported peace deal that fell apart in 2022. In any case, the only other peace deal that is currently officially on the table as far as Russia is concerned is basically the same. What's actually workable in the end depends solely on how far the West is willing to go, IMO. There's no realistic scenario i…

Appreciate the detailed response, and it seems we are very broadly on the same page. Assuming no further military push from the West -- do you think the Russian side would acquiesce to some form of "Cease fire along current lines, but no legal recognition of the territorial claims, and no lifting of sanctions or arrest warrants, and no return of seized foreign assets"? (That's very far from my own ideal outcome, but…

It's hard to say. It would be essentially the same thing they already did back in 2015, so there's precedent. But back then it happened IMO because they didn't think they were sufficiently prepared in economic and military terms to openly wage war, so Russia took as much as it could with the "northern wind" (the euphemism separatist forces used to refer to direct Russian involvement in combat) and then took a break to prepare for the real deal.

So I think now they would do it if they believe that taking another break would benefit them more than it benefits Ukraine. But, again, looking at post-2015 developments, it's not clear to me why they'd think that. The reason why their advance in the east was so much slower than elsewhere is that Ukraine had a massive effort to build fortifications and infrastructure around them under Poroshenko. It's why Ukraine could hold Avdiivka for so long despite it being less than 10 miles away from Donetsk, and it's partly why Russian losses are so high. Russia has managed to punch through that line in several places in this past year despite those high costs, but if they stop the advance now, that kinda defeats the purpose of that. And meanwhile if Ukraine could get some respite, they would surely spend a lot more resources on another defensive line along the new border, probably with significant Western assistance this time, as well (since "defensive" military aid generally enjoys higher popular support, countries like Germany might be more willing to do that even if they aren't willing to send more tanks and missiles). As well as building new munition factories etc, likely also with Western defense companies involved. It would also mean the return of millions of Ukrainian refugees, reinvigorating their economy.

This all assumes that Russia wants to take as much Ukrainian territory as they can get away with, in the long term. But, given that the war literally started with them trying to capture Kyiv, I think it is a safe assumption. If they gave up on that goal since then, they wouldn't be pushing so hard now despite the losses.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#236

Post by carlosjobim »

int_19h wrote: post #233
carlosjobim wrote: post #223

Earlier quoted context omitted.

If we're talking about physical paper money bills, then the government will not be able to confiscate these from people, they can't search every nook and cranny for something which is so easy to hide. The way the Finnish government confiscated money was by imposing rules on how their currency could be used and the value of the bills. For foreign currency, they can try to impose rules and a fake exchange rate, but the…

By "confiscatory" I mean any policies that amount to taking your money or preventing you from using it as money. With physical paper money bills, making them outright illegal to hold is actually surprisingly effective - you don't need 100% enforcement rates, just high enough to make it impractical for most people. One historical example of such a society was the USSR.

I didn't know we were talking about "most people". They will do whatever their government tells them to do: hand over any property the government demands, and send their children to the trenches to die.

If you want a solution for most people, the solution is to not have a communist government or any other government that will confiscate your wealth.

If you want a solution for yourself, it is bullion and/or foreign currency. If the government declares their own currency as being illegal to hold, then that currency now has a value of 0. For you and for everybody else. If they declare foreign currency as being illegal to hold, that only has implications within the country. And the black market does not care about borders.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#237

Post by eru »

FuriouslyAdrift wrote: post #231
hgomersall wrote: post #132

Earlier quoted context omitted.

You mean interest rates don't necessarily control inflation?

Japan is the worlds first steady state economy and got that way due to a sudden stagnation in trade and then demographic crash over a generation. They've tried just about anything (except unrestrained foreign immigration or forced breeding) to jump start the economy but nothing has worked. Inflation is effectively zero...

They haven't tried just about anything. They haven't tried printing enough money.

As a counterfactual: if you can print arbitrary amounts of money without raising inflation, you can just gradually buy up all the assets in the world with newly printed money. As far as I can tell, the Japanese central bank does not own the US stock market or all the gold in the world or all bitcoin etc, yet, so they haven't printed enough money.

Btw, what makes you think Japan is a 'steady state economy'? https://fred.stlouisfed.org/series/NYGDPPCAPKDJPN says their real GDP per capita grew fairly steadily over the years. It's just the price level that has been relatively steady, but if that's your yardstick, than just about any economy that used to be on a gold standard would also fit that idiosyncratic definition.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#238

Post by yowlingcat »

eru wrote: post #211
yowlingcat wrote: post #191

Earlier quoted context omitted.

When it comes to the government treasury markets by volume (which back the global financial system), it objectively is.

But that doesn't (directly) impact inflation in other countries.

Yes it does.

Re: Setelinleikkaus: When Finns snipped their cash in half to curb inflation

#239

Post by int_19h »

carlosjobim wrote: post #236
int_19h wrote: post #233

Earlier quoted context omitted.

By "confiscatory" I mean any policies that amount to taking your money or preventing you from using it as money. With physical paper money bills, making them outright illegal to hold is actually surprisingly effective - you don't need 100% enforcement rates, just high enough to make it impractical for most people. One historical example of such a society was the USSR.

I didn't know we were talking about "most people". They will do whatever their government tells them to do: hand over any property the government demands, and send their children to the trenches to die. If you want a solution for most people, the solution is to not have a communist government or any other government that will confiscate your wealth. If you want a solution for yourself, it is bullion and/or foreign cu…

If most people won't take your dollars/gold/... because they fear getting caught, then what use is it to you? You won't be able to spend it. There were actually people like that in early Soviet days, guys who managed to preserve a stash of their former wealth, but without the ability to use it meaningfully.

The best mitigation you have for that kind of government is having a ticket out.

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