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What Happens When A Paper Currency Fails?
Once upon a time there was a really nice country, Yugoslavia,but due to huge Economic and Religious problems, the country eventually was divided into smaller countries. Tito used to run the country successfully, balancing between the West and the East. It all worked well for Tito, who financed debt with printing money. Eventually, reality caught up, and Yugoslavia experienced one of the biggest Hyperinflation periods the World has ever seen. Sounds familiar?
Full Fiat Currency Map, click here.
From Thayer Watkins,
Under Tito, Yugoslavia ran a budget deficit that was financed by printing money. This led to a rate of inflation of 15 to 25 percent per year. After Tito, the Communist Party pursued progressively more irrational economic policies. These policies and the breakup of Yugoslavia (Yugoslavia now consists of only Serbia and Montenegro) led to heavier reliance upon printing or otherwise creating money to finance the operation of the government and the socialist economy. This created the hyperinflation.
By the early 1990s the government used up all of its own hard currency reserves and proceded to loot the hard currency savings of private citizens. It did this by imposing more and more difficult restrictions on private citizens’ access to their hard currency savings in government banks.
The government operated a network of stores at which goods were supposed to be available at artificially low prices. In practice these store seldom had anything to sell and goods were only available at free markets where the prices were far above the official prices that goods were supposed to sell at in government stores. All of the government gasoline stations eventually were closed and gasoline was available only from roadside dealers whose operation consisted of a car parked with a plastic can of gasoline sitting on the hood. The market price was the equivalent of $8 per gallon. Most car owners gave up driving and relied upon public transportation. But the Belgrade transit authority (GSP) did not have the funds necessary for keeping its fleet of 1200 buses operating. Instead it ran fewer than 500 buses. These buses were overcrowded and the ticket collectors could not get aboard to collect fares. Thus GSP could not collect fares even though it was desperately short of funds.
Delivery trucks, ambulances, fire trucks and garbage trucks were also short of fuel. The government announced that gasoline would not be sold to farmers for fall harvests and planting.
Despite the government’s desperate printing of money it still did not have the funds to keep the infrastructure in operation. Pot holes developed in the streets, elevators stopped functioning, and construction projects were closed down. The unemployment rate exceeded 30 percent.
The government tried to counter the inflation by imposing price controls. But when inflation continued, the government price controls made the price producers were getting so ridiculous low that they simply stopped producing. In October of 1993 the bakers stopped making bread and Belgrade was without bread for a week. The slaughter houses refused to sell meat to the state stores and this meant meat became unvailable for many sectors of the population. Other stores closed down for inventory rather than sell their goods at the government mandated prices. When farmers refused to sell to the government at the artificially low prices the government dictated, government irrationally used hard currency to buy food from foreign sources rather than remove the price controls. The Ministry of Agriculture also risked creating a famine by selling farmers only 30 percent of the fuel they needed for planting and harvesting.
Later the government tried to curb inflation by requiring stores to file paperwork every time they raised a price. This meant that many store employees had to devote their time to filling out these government forms. Instead of curbing inflation this policy actually increased inflation because the stores tended to increase prices by larger increments so they would not have file forms for another price increase so soon.
In October of 1993 they created a new currency unit. One new dinar was worth one million of the “old” dinars. In effect, the government simply removed six zeroes from the paper money. This, of course, did not stop the inflation.
In November of 1993 the government postponed turning on the heat in the state apartment buildings in which most of the population lived. The residents reacted to this by using electrical space heaters which were inefficient and overloaded the electrical system. The government power company then had to order blackouts to conserve electricity.
In a large psychiatric hospital 87 patients died in November of 1994. The hospital had no heat, there was no food or medicine and the patients were wandering around naked.
Between October 1, 1993 and January 24, 1995 prices increased by 5 quadrillion percent. This number is a 5 with 15 zeroes after it. The social structure began to collapse. Thieves robbed hospitals and clinics of scarce pharmaceuticals and then sold them in front of the same places they robbed. The railway workers went on strike and closed down Yugoslavia’s rail system.
The government set the level of pensions. The pensions were to be paid at the post office but the government did not give the post offices enough funds to pay these pensions. The pensioners lined up in long lines outside the post office. When the post office ran out of state funds to pay the pensions the employees would pay the next pensioner in line whatever money they received when someone came in to mail a letter or package. With inflation being what it was, the value of the pension would decrease drastically if the pensioners went home and came back the next day. So they waited in line knowing that the value of their pension payment was decreasing with each minute they had to wait.
Many Yugoslavian businesses refused to take the Yugoslavian currency, and the German Deutsche Mark effectively became the currency of Yugoslavia. But government organizations, government employees and pensioners still got paid in Yugoslavian dinars so there was still an active exchange in dinars. On November 12, 1993 the exchange rate was 1 DM = 1 million new dinars. Thirteen days later the exchange rate was 1 DM = 6.5 million new dinars and by the end of November it was 1 DM = 37 million new dinars.
At the beginning of December the bus workers went on strike because their pay for two weeks was equivalent to only 4 DM when it cost a family of four 230 DM per month to live. By December 11th the exchange rate was 1 DM = 800 million and on December 15th it was 1 DM = 3.7 billion new dinars. The average daily rate of inflation was nearly 100 percent. When farmers selling in the free markets refused to sell food for Yugoslavian dinars the government closed down the free markets. On December 29 the exchange rate was 1 DM = 950 billion new dinars.
About this time there occurred a tragic incident. As usual, pensioners were waiting in line. Someone passed by the line carrying bags of groceries from the free market. Two pensioners got so upset at their situation and the sight of someone else with groceries that they had heart attacks and died right there.
At the end of December the exchange rate was 1 DM = 3 trillion dinars and on January 4, 1994 it was 1 DM = 6 trillion dinars. On January 6th the government declared that the German Deutsche was an official currency of Yugoslavia. About this time the government announced a NEW “new” Dinar which was equal to 1 billion of the old “new” dinars. This meant that the exchange rate was 1 DM = 6,000 new new Dinars. By January 11 the exchange rate had reached a level of 1 DM = 80,000 new new Dinars. On January 13th the rate was 1 DM = 700,000 new new Dinars and six days later it was 1 DM = 10 million new new Dinars.
The telephone bills for the government operated phone system were collected by the postmen. People postponed paying these bills as much as possible and inflation reduced their real value to next to nothing. One postman found that after trying to collect on 780 phone bills he got nothing so the next day he stayed home and paid all of the phone bills himself for the equivalent of a few American pennies.
Here is another illustration of the irrationality of the government’s policies: James Lyon, a journalist, made twenty hours of international telephone calls from Belgrade in December of 1993. The bill for these calls was 1000 new new dinars and it arrived on January 11th. At the exchange rate for January 11th of 1 DM = 150,000 dinars it would have cost less than one German pfennig to pay the bill. But the bill was not due until January 17th and by that time the exchange rate reached 1 DM = 30 million dinars. Yet the free market value of those twenty hours of international telephone calls was about $5,000. So despite being strapped for hard currency, the government gave James Lyon $5,000 worth of phone calls essentially for nothing.
It was against the law to refuse to accept personal checks. Some people wrote personal checks knowing that in the few days it took for the checks to clear, inflation would wipe out as much as 90 percent of the cost of covering those checks.
On January 24, 1994 the government introduced the “super” Dinar equal to 10 million of the new new Dinars. The Yugoslav government’s official position was that the hyperinflation occurred “because of the unjustly implemented sanctions against the Serbian people and state.” (Watkins)
Further mega Inflation periods, click here.
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I hate it when religious nutters comment.
Not knowing what you define a "religious nutter," I'll assume I meet that label. GoinFawr called me a "zealot" on the Tyranny page, so that should pass...
Anyway, you have "religious nutters" commenting here all the time. Some of us are versed in macro economic theory, some of us in financial engineering, some of us in string theory and quantum physics, etc., etc. I know I've had some good discussions here about risk quantification as well as the propensity for asset devaluation to coincide with hyperinflation/currency destruction.
So...is what you really hate any reference to religion? And if so, why...don't morality, ethics, ideology, and theology play a part in the grand game that is unfolding?
See comment above.
why do people who hold to religious beliefs have to be nutters? if all that exists in this world is the law of man, if there is no higher moral authority at work then we are truly doomed. biblical prophesy speaks of men turning away from a higher moral code and to their own selfish, unquenchable lust for earthly riches and power and the consequences there of. and guess what? if you open your eyes for a moment and tear yourself away from your own myopic normalcy driving bias you will see that these things are indeed coming to pass, but by being so judgmental, close minded and "mainstream" in your views, which by your comment you obviously are, you make yourself a part of what is destroying America and not a part of the solution. i'm not saying anybody should read the bible or that faith is right for you, just that you should be a bit more independent in your thought and not so easily taken in by the social engineers that have conditioned you to believe that bagging on religion is good fora cheap laugh
you are one of the sheep.
To say that morality is only from religion is patently ridiculous. Children know right from wrong before they can speak.
Now hold on there Setarcos.
I am invested in Gold and Silver because the worldly things should fail and even the Gold and Silver will not save anyone in the last days from what is coming either here on earth or on the other side facing God.
The "Stuff" you refer to is the Word of God and when taken with a ,,, understanding that he is the way, truth and light along with the Bible containing just about everything you need to know about anything at all for God made you. Yes there is evil and good. Yes there is Revelations and so is Genesis.
If you review my posts going about at least a year, I don't often refer to religion as a revelant topic here.
But today? Yes indeedy. And I tell you why.
Take Freemasonry. A lot of thier symbolism and signs are all over our Paper Money because some of our Founding Fathers that made this land out of nothing by way of war against England to be free. When they signed that Independence, instantly everything, everyone associated with the Signers and all resources are forefiet on sight to King George the III should any of the Founders be killed, Captured or God Forbid lose the entire Revolution.
I am not a Mason, but all those who are NOT a Mason are completely excluded from the Lodges or any of the things that go on within them.
We came damn close a few times. The 400+ from "Old Line Division" Marylanders who have given thier lives in NYC downtown so that the rest of the Army may escape. They are buried under several city blocks to this day unknown or unnoticed. The particular battle was interesting because of time of day and the relatively barren lack of cover and a water crossing under fire. (Not Trenton... that was a Offensive, an invention that would secure a great mark by capturing the Hessians. Those Barracks still stand today in Frederick.) They say a fog rolled in from nothing and covered the Army as the rear gaurd sacrificed all to hold off the much stronger English.
This whole nation over 230 years has been bought, paid for, bled for and died for and all for what?! Yes there is some who are Evil and covet everything that America stands for and would corrupt the entire Country (It's happened before in Germany etc) and enslave it to thier purposes.
We have technology that now can identify your face and associate you, your face and find you online should someone take a picture of you and post (Tag) on Facebook. That image contains exfil data that can be shared and hunted across databases for all the USA for additional Matches to you personally.
Now I finally get around the Paper Money.
You can take 100 dollars, spend it cash over the counter and buy ammunition. No one except the store and whatever records exist will know anything.
Now they are trying to literally assign each bullet a name, number and tie it to you, the purchaser. Cash? Nope. Do it with a Credit card or better yet a Debit card. Now you are known as someone who supports the 2nd amendment.
The evil forces seek to enslave America by destroying the US Dollar in Cash as we know it today. Once they complete that goal, we would have little choice than to take chip equipped cards or even rfid'ed cash bills in the new currency that will follow us in real time wherever we go someday.
Some laugh at the Doomers like me who think to go back to a simpler life using Technology that does not require power from the existing grid or require any sort of transaction involving a electronic record. I go to pawn shops to buy older camcorders and cameras on purpose because those dont have the facial recognition and GPS features that can literally share with the world your exact location at the time you take a picture of your home. "Click" the two proud homeowners, you and your spouse now is spread all over the world to anyone who wants to eliminate you or find you.
Think carefully next time before you pooh pooh religious stuff. It has been a method by Martin Luther (Not King, but going back to Medieval times) who converted the Catholic church's books into a Common language Bible understood by anyone... and resulted eventually in the Magna Carta and then the "Bill of Rights" as we know it today.
That mark is already here in subtle forms. If you know it or not. It's all around. I read about one town in the UK that has Cameras capable of taking car tags. And if they progress into Iris scanning and facial recognizing, they would become capable of tracking every man, woman, child and vehicle that entered and left the town 24/7 and ammass enough data that will make even the most efficient Nazi, Stalinists and other evil Forces green with envy.,.. Imagine, what they did back then on Paper and pencil we do today instantly.
If you wait while living your little life day to day sleeping as a sheep would... one day you might wake up to a prision carefully crafted for your convience or your confinement and eventual death at the mercy of another person.
Magna Carta: AD 1215
Luther posts 95 theses: AD 1517
Ergo, Luther's actions did not "result" in the Magna Carta!
Don't get carried away by the flow of your rhetoric.
it never ceases to amaze me, how someone can be well versed in a variety of topics, skilled and successful in a career, and yet turn into a complete idiot, when the religion can is opened.you're gonna have to dig a little deeper, and a little closer to home, if you want to realize the truth.
I suppose I cannot understand, because I am in Australia.
However you have gone a long way towards enlightening me about the US HungrySeagull, so maybe I might yet be saved, though it might take me a while to visit pawn shops to buy stuff I do not need or want.
It is no coincidence that the currency mentioned in Revelations is called "MARK".
The current incarnation of the old mark is the euro.
Call me Marco, please. Marco Fevil.
That's pretty desperate, even for you.
Pawn shops were our early banking and credit system between Colonial times and the Civil War.
Regarding the Euro, if you take a look at Biblical illustration of the tower of Babel, you will probably find a similarity in the Euro Headquarters today.
This place has gone full retard.
Friend, you seem to have something of a chip on your shoulder this morning...
...yes, the pun was intentional...
You can easily NOT read the post, and you can just skip the remarks,and our opinions.Just being religious does not make you Nuts.That's your opinion, and your entitled to it.Just as we are entitled to ours.Don't like it, no one is forcing you to read it.
Just like T.V, and Radio.
"Just being religious does not make you Nuts."
Yeah, it does. Believing in the supernatural. Thinking you have an invisible best friend. Considering the religious mysticism of slave owning, wife beating prehistoric desert tribes inspiring and realistic. Ignoring science when it invalidates your superstitions. Hating the 'wrong' people because an old book tells you to. Passionately devoting yourself to one religion, which just happens to be the one your parents brought you up in, instead of the 9,999 other religions in the world. Knowing you're right, even though you didn't put half as much effort into studying what the other guy might think, or why he thinks it. Accepting the most outrageous ideas, based on not one jot of rational scientific evidence. Hero-worshipping role models that your own abrahamic religious texts actually celebrate for having raped, sold their kids into slavery, had sex with children, murdered children, committed genocide, mutilated and enslaved.
I'd say that's nuts. And I'd say religious people have a lot of to apologise for, for inflicting their nuts behaviour on the rest of us.
And before you get angrier, remember that us godless atheists are less likely to be in prison, divorce our wives, drop out of college, have illegitimate kids, make minimum wage, or have low IQs. Just for the record. If you want to think about that.
Really? And who is imposing any religious views on you, liar?
Fair enough. Sorry.
Double post.
Wow, sobering. The article shows that fiat is based on a confidence game. Smoke and mirrors. The people in power and bankers know, the masses don't suspect. It's getting shakey in fiat land. Better learn to think in terms of ounces and pounds and acres instead of dollars and Euros....
World Geography seems to be changing faster today then ever before. Soon One Govt in the works?
"We are on the verge of a global transformation. All we need is the right major crisis and the nation will accept the New World Order."
-- David Rockefeller speaking at a UN Business Conference, Sept. 14, 1994
"We shall have world government whether or not we like it. The only question is whether world government will be achieved by conquest or consent."
-- James Paul Warburg - In an address to the U.S. Senate, July 17th, 1950
“The main obstacle to a stable and just world order is the United States.”
~Georgi Soros
Nazi Collaborator
Convicted inside trader
Club of Rome.
George H.W. Bush made his New World Order speech on Sept. 11, 1990.
A thousand points of light (whatever that is). And, coincidentilly, exactly 11 years later, the 9/11/01 disaster occured. Google it.
I'm assuming this New World Order is a one world government. You have to establish a one world currency before you can establish a one world government. Will the prince of this world (Lucifer) then take his throne? Who knows. Check out Albert Pike and his 3 World War predictions. Don't know if it is true or not, but I did run in to this on the internet.
Lucifer? Seriously? It's obviously gremlins or aliens. Lucifer?!?!? Comeon!!!
Well, that's not at all suspicious. Just a coincidence, really.
if dates are codes, then what parties are sending/receiving this message?
If symbols & imagery are codes, then how is this message transcribed?
Cheers,
Beef
old article same problems facing money printers
That is no longer true. Serbia and Montenegro separated in 2006. Yugoslavia no longer exists today. The article seems to be written a few years ago (in 1996).
The age of the article doesn't matter.
It just shows how printing and the loss of faith in the currency create the hyper inflation.
It's like the stockmarket, everybody expected it to inflate so they just kept on rising prices which cause hyperinflation because nobody knew anymore what it was worth.
And if we look at the inflation in the last 10 years it's constantly speeding up. The 2008 crisis just slowed it down a bit but now it's catching up speed again.
But what is very clear is that every country who had inflation solved it in the end by adopting a currency that was bigger then their formal currency. AND THE DOLLAR DOESN'T HAVE THAT OPTION AS IT'S THE BIGGEST CURRENCY IN THE WORLD!
There simple isn't a currency who could substitute it. MAYBE the Euro, but that one is going down AS FAST!
A nation with the most powerful military in history, does not even come close to having a currency backed by "nothing". To suggest as much is to ignore the nature and history of the petrodollar.
To those who insist that the dollar is backed by "nothing" please answer the following:
Oil is traded in dollars. Why?
The United States military empire (it is one, of course) has most of it's foreign bases in the oil producing areas of the world. Why?
America's most powerful military proxy happens to be in the Mideast. Why? (Newsflash: It ain't just the Israel lobby)
America's new, supposedly anti-war President opened a third front in Libya. (Unless you believe the spin about it being a NATO operation). Why was this front opened?
The US considers Iran and Venezuela to be military threats. Despite the clear impossibility of these militarily insignificant nations mounting any real threat against the US: What is the reason for this propaganda against these two countries in particular?
Iraq was on the verge of selling oil for Euros, and then the US invaded. Check the date --> http://archives.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/ This was the greatest threat to the American oil elites in the history of the United States.
The dollar is essentially backed by oil. And has been for quite some time now.
The question of course is: Will it continue to be?
But that question is less of a monetarist / debt question, and more of a geopolitical question. But comparing the US with Yugloslavia or Zimbabwe, is idiotic. Zimbabwe didn't control (by force) the largest energy producing region in history with the largest military force in history.
I want my 2 minutes back for reading this bullshit.
I want my nanosecond back for reading your baseless, insubstantial response, Chuck.
Popo,
Thanks for a thought-provoking post. The following certainly caught my attention.
"The dollar is essentially backed by oil. And has been for quite some time now."
Were that directly true, we would be able to sustain our economy, imo. The truth, for me, is that the dollar is backed by fear of nuclear attack by the US of A and that is where the problem lies. We have spent our way into default and since we are the largest developed economy, our default will bring down the entire system(I could say, has brought down the entire system).
It has been twenty years since we were even remotely threatened by anyone. In those twenty years we have wasted more than any of us trolls will ever know and certainly enough to have never self-destructed. These are not moot points, no matter who desires to argue them.
It is difficult for any of us to see ourselves as part of the solution without admitting that we are also part of the problem. I admit this freely and am doing what I can to my personal responsibility for the problem----war, death, and destruction of weaker nations and peoples, but it would have been so much different had the so-called peace dividend ever been paid rather than squandered on more military.
Yeah, we can say 'it's them' all we want to-----but they are not going to change things and besides, 'we' are part of 'them' by default.
Ironic use of the word, is it not? Well, we're a funny people.
thanks again, Popo-----I don't know where else these thoughts would have come from except for your post
By the way -- I should clarify: Debt is absolutely an existential problem for the USA. I didn't mean to suggest that "everything was peachy" at all.
I was simply addressing the frequent claim the "The dollar is backed by nothing" is plain silly.
Were it truly backed by nothing, it's value would already be zero.
It is backed by a petrodollar regime, which in turn is backed by the world's most powerful military. One must also say, that this 'backing' is insufficient to preserve it's value because the deficit and debt have grown onerously large.
Lots of junks. So few understand the role of oil here.
I highly suggest ZH readers spend some time on oil-trading boards. The conversation is so completely different there. And oil traders for the most part are a very bright, and very aware bunch.
Popo,
thanks for your response. I agree about the oil but we choose not to use anything else nor to modify our behavior, so indeed, it has become an existential problem.
The military part of the equation has weakened as the rest of the world, with few exceptions, is beginning to see that with the exception of our nukes, that the US military is inept and ineffective; I am not talking about the citizens of the US of A, however. Due to the propaganda machine, we the people still believe unfailingly in our troops-----or do we? A revolution may be afoot if this is not the case because we do fear our own military.
My realization of the dollar being backed by our military first and then oil or whatever commodity we are short of comes from the boost the dollar got after we invaded that monster of communism Grenada under the guise of rescuing a few US citizens-----well, I won't go on with this because the opinions are too strong for discussion and the fact too murky to clarify.
In fewer words, whether it is military force or oil or both or more than the above, it seems to me we are very much in agreement that the dollar is backed by something other than intelligent citizery and government----that revolution may be just around the next corner.
Sorry to be so inarticulate and wordy over this----it started out as a thank you for clarification and I have botched the job.
Thank you om
The concept that the Dollar is backed by oil because it is the currency used to denominate the price is a total crock of shit.
If the Dollar were oil backed the price of oil in Dollars would be essentially stable, but in reality oil prices are more correlated to the Euro.
That's like saying "If gold were a store of wealth it's value wouldn't change by 30% in a year relative to other commodities"
You're barking up the wrong tree.
No, it's not. It's like saying that if the Dollar were a gold backed currency, the Dollar price of gold wouldn't change...