Belarus Hyperinflation Update: Food Runs Out As Friendly Foreigners Take Advantage Of The "Favorable" Exchange Rate Arb
Yesterday we had the first case study of what happens in a hyperinflation, when we noted that the local central bank had just hiked interest rates from 22% to 27%. Net result for the economy? Zero. Today is case study #2 where we learn what happens to an imploding economy which happens to be surrounded by friendly neighbors who just happen to find themselves in a massive arbitrage courtesy of a currency that is losing multiples of its value on a monthly if not daily basis. Per Bloomberg: "Belarus’s supermarkets are running out of meat as Russians take advantage of a currency crisis that a devaluation and the world’s highest borrowing costs have failed to stem. “All meat has gone to Russia,” Alexander Andreyevich, an 82-year-old former tractor-plant worker, said Aug. 25 in Minsk, the capital. “My relatives near the Russian border called me a few days ago and said the shops are empty."..."Private stall owners simply go and buy meat from state- owned vendors and sell it a couple of steps away for a hefty profit,"Deputy Agriculture and Food Minister Vasily Pavlovsky told reporters in Minsk Aug. 24. The government banned individuals in June from taking basic consumer goods such as home appliances, food and gasoline out of the country. Russians, buoyed by the removal of border checkpoints July 1 as part of a customs union, have circumvented the restrictions." Funny- if the locals had preserved their purchasing power by holding their money in gold, they would not find themselves in a position where those who still have a stable fiat exchange rate (for the time being) can literally steal products from under their noses for a paltry sum as sellers scramble to converts products into some currency before it is devalued even more tomorrow.
More from Bloomberg:
The crisis has sparked protests as Belarusians vent their anger at President Alexander Lukashenko, dubbed Europe’s last dictator by the administration of former U.S. President George W. Bush. While the authorities have sought to control food costs to quell public discontent, buyers from neighboring Russia have pushed meat prices higher.
Belarus will allow the ruble to float from mid-September and will remove restrictions on depositors seeking to exchange local currency for dollars and euros, Lukashenko said yesterday.
“The Belarusian ruble’s exchange rate will be determined by supply and demand, as with any other commodity,” he told the government and central bank, according to the Belta news service. “We will not support the exchange rate artificially.”
What happens then is simple: revolution, as the currency will collapse into a hyperinflationary vortex. We fully expect the exchange rate a year from today to be several million percent higher, as the ghost of Weimar and all other failed Keynesian experiments moves in to haunt this former Soviet satellite country.
It gets worse:
As well as meat, services are also attracting Russians, who make up one in two visitors at the ‘Lode’ spa 160 kilometers (100 miles) north of Minsk and prefer luxury suites, a representative of the resort, Natalya Varvantseva, said Aug. 26 by phone.
Many of them pay with Russian rubles or dollars, the scarcity of which has pushed black-market exchange rates far below the central bank’s official 5,061 rubles per dollar.
The unofficial rate slipped to 9,900 by Aug. 25, according to a survey of companies offering foreign currency conducted by Infobank.by, a financial-news website. Prokopovi.ch, a service that matches buyers and sellers of foreign currency online, quoted 8,842 rubles per dollar yesterday.
And again, the case for gold:
The only legal way for citizens to obtain foreign currency is by waiting at licensed exchange booths, where queues often exceed a hundred and the names of people who have left their details on previous visits are called daily.
If only these people had known in advance what happens when a deranged Keynesian madman is in charge of it all... Oh well, they will learn now.
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Predatory.
Coming to another country near you.
Bennie can stop that in its tracks from happening here... in ummm... 20 minutes... maybe 22
220, 221....whatever it takes.
So he's a good guy then. Was this a plutocratic take down?
Read and weep. This will, to some extent exactly what happens in the US when the dollars depreciates dramatically against other currencies and commodities. Foreigners will out bid us on many of the essentials.
As for other currencies, it's a race to the bottom, brother. As for commodities... everyone has the same opportunity to convert their paper money into something of value. Every man for himself.
Depends on what is the first to fall, or if they will all fall at once. These are unprecedented times.
Of course, the owners of gold and silver will keep a strong bid on things as well.
stop inflation in 15 minutes, bitchez
Krid, so the game really becomes where said commodities are grown/found and who controls the supply routes in the face of $200 + oil (easily in 3 months when the food crisis will really hit). America's current concentration is oil supply chain, but Agenda 21 looks like they will have an iron-lock on the food supply chain in the continental US anyways. And it is happening fast, in lock-step with an ever increasing population on SNAP. None of this is of course co-incidental.
It's going to get really interesting really fast, because the one thing no government can control for too long without violence, is a hungry population.
Next WAR will be triggered over food/water, not oil.
V
http://aadivaahan.wordpress.com/2011/08/30/humor-me/
http://youtu.be/iX3kxAA2L4Q
I don't buy the case for gold in hyper-inflation, if you actually want to continue live a country that is going through it. If I had limited food, I wouldn't trade it for gold if I had plans to stay put. Society completely disintergates and breaks down to a barter society for nessisities.
In other words, if you had limited food would you really trade it for gold and see your family starve?
However, if I had plans to leave, I'd convert everything to gold which would store value until I arrived at my destination.
What do you see as the answer to the confetti game and inevitable hyperinflation.
I see the soundness of having gold in this situation. You could sell your gold for, what is it, Russian rubles, and afford to buy food cheap. You never know the Peso may be worth more than the dollar soon....
Gold isn't for use during the hyperinflation. It's for after.
Agreed.
I agree also, I have had to sell a small portion of my PM's to catch up on some long over due bills. I'm not saying to sell all of it, but in a pinch it has been a godsend. I won't have to worry about food as I have stocked up quite enough. I won't be doing anything with my PM's now except to hold until we reset or whatever happens.
"Reset"??????? Thats not the same rosey picture as DoD speculates...
If the shit fails globally, copper and lead will do you more good than gold.
I don't buy the case for gold in hyper-inflation, if you actually want to continue live a country that is going through it.
///////////////////////////////////////////////////////////////////////////
But no, that is right. Gold would protect nothing. People with the fiat money would transfer the gold to their own pockets.
What is shown here is the effects of Smithian economics. People with gold would only transfer their gold to money fiat users.
But hey, that is a run for profit blog. And propaganda is better to build profits than facts. It is all the story of marketing. Propaganda aiming at collecting a profit.
So yep...
That's ok, it'll boost exports.
does this mean the US meat will end up in Canada and Mexico?
I was going to comment that I'm glad I don't live anywhere near the border, but then I remembered the NAFTA superhighway complete with a Mexican port in Kansas City. Between all of the rail, air, freeway and river transportation avenues available (KC is the most escapable major city in the US), that place could become the black hole that swallows the output of all of the flyover states.
Interestingly enough, KC is also where fedgov hoards all of its purchased dairy products (cheese!). Will they be exported too? Or used to bait the FEMA camps?
Are you talking about the NAFTA SuperHighway that Bilderberg puppet Rick Perry was a big proponent of? Before he was forcibly vaccinating young girls and and vetoing legislation to shut the TSA down?
No, I think you are confusing Rick Perry with governor Rick Perry, notorious switch hitter and sexual pervert.
Oh right... And I need to be careful not to confuse Governor Rick Perry and "candidate" Rick Perry with pre-Governor Rick Perry who said Hillarycare and forced health insurance were great, just before he was Al Gore's Texas campaign manager.
Brilliant exchange gentlemen.
<Golf Clap>
V
http://youtu.be/BmjHT5GpAYQ
That isn't the same Rick Perry who was Al Gore's campaign chairman in Texas, was it?
How's this one chart on the "Baltic dry ass drubbing" index?
'Tractor plant worker'....ominous.
SheepDog-One
"'Tractor plant worker'....ominous."
I've seen that movie.
"Private stall owners simply go and buy meat from state- owned vendors and sell it a couple of steps away for a hefty profit,"
"Private banks simply go and buy fiat money from the FED and sell it a couple of steps away for a hefty profit."
fixed it
Never let a good crisis go to waste. Here comes Russia to the "rescue" one way or another... The world is heating up...
Good fucking lord! This is the perfect opportunity for Bono and Geldoff to stage a massive concert.
Quick, quick name a Belorussian band. We need that local flavor.
Fuck me, Gore needs some media coverage...maybe Global warming, scratch that, Climate change can be combined with SAVE THE BELORUSSIANS.
GOT IT! SAVE THE BELORUSSIANS WITH CAP AND TRADE!
Written by Sting [& Sergei Prokofiev!]
In Europe and America there's a growing feeling of hysteria
Conditioned to respond to all the threats
In the rhetorical speeches of the Soviets
Mister Krushchev said, 'We will bury you'
I don't subscribe to this point of view
It'd be such an ignorant thing to do
If the BeloRussians love their children too
How can I save my little boy
From Oppenheimer's deadly toy?
There is no monopoly on common sense
On either side of the political fence
We share the same biology
Regardless of ideology
Believe me when I say to you
I hope the BeloRussians love their children too
There is no historical precedent to put
Words in the mouth of the president
There's no such thing as a winnable war
It's a lie we don't believe anymore
Mister Reagan says 'We will protect you'
I don't subscribe to this point of view
Believe me when I say to you
I hope the BeloRussians love their children too
We share the same biology
Regardless of ideology
What might save us, me and you
Is if the BeloRussians love their children too
Brilliant!, Gully Foyle <G>
Oppenhiemer's deadly toy. Hmmmmmm!
Awesome Gully.
V
If the Foreigners have brought all the the food and there is nothing to eat,eat the Foreigners and why let a good crisis go to waste.
How the hell do you buy gold in a communist dictatorship? Anywho i find it hard to believe Venezuala isn't next. Sounds like intervention risk...
Smuggle it in. Melt it into unassuming objects and paint it.
If the gov. doesnt like it, fuck em. They're fine with everyone starving.
I would assume someone could come in use gold buy tangible goods to export them out and also be "paid" in the fiat currency to make it look legit.
"We have to use the indefinite article, "a dildo", never … your dildo."
Same way Vietnam does, on the black market.
bribes work
does this mean i can get a screaming deal on a belarus tractor now?
becky @13:39,
Yep, but shipping cost is a bitch.
Plus you will be arrested for a State Violation of Agenda 21 for attempted USE.All foods henceforth must be Monsanto, or ADM certified 10-15yrs/ All monies ur possession forfeited to STATE agency who are caught ju max penalty for eating food grown elsewhere.
Ju haff vin varrned!!
All of your Belarus tractors are now belong to us.
Do you have a big sail boat? If so, then yes. There is risk involved, like sinking, pirates and such. if you pay in cash, just pray those dollars you bring dont collapse to zero before you get there. Otherwise the deal is off.
some farmers in neighbouring Lithuania do get EU financing and use it to buy cheap tractor and other machinery for their farms from Belorussia because it is much cheaper than buying from Germany.
John Maynard Keynes on run-away inflation:
Always liked Marx and Lenin. Because to their ownself they were true.
Wrong, but you dont have to be right to believe. They held on to their belief to the bitter end.
You can have character and be wrong. its those without character who hold nither moral or ethical nor logical bearings that i dispise.
"To thy'n own self be true." You can't lie to your heart nor to your god. Only you can fine morality and only you can ignore it.
Humanity is all and nothing. It is all we create for ourselves and nothing we do not. The flower has no morality nor does the spider who hides within.
Only us few in the universe have a sense of betterment. We can be and act better then the flower or spider. We can and do decide to be and act with a moral code.
"Judge not yet the be judged. " I am ready for judgement; are you?
"Judge not yet the be judged. " I am ready for judgement; are you?
--------------------------------------------------------------------
US citizens collegial answer: "we are ready to be the judge; are you?"
"Private stall owners simply go and buy meat from state- owned vendors and sell it a couple of steps away for a hefty profit,"...
One more reason to go vegetarian .....
just imagine when this shit hits Amerika
How far down do you surmise those profits trickle down?
TY - in other news -
Greece Denies Reports It Hired U.S. Law Firm for Euro Exit
Greece should take a note. This will happen, when/if they leave the eurozone. New drachma down 90%, prices up 90%.
black market here we come? wait a minute. i aready do that...............oh my
For those offshoring their businesses there the expenses just get lower and lower until things eventual get so bad that everything in the office is stolen.
Huh amazed that the MSM hasn't cheered on this as a massive success to boost exports. Can't even keep meat on the shelves, everyone is hungry to by cheap Belorussian goods, the Belorussians are just hungry. Central planning works...just ignore the suffering of the people.
shades of price controls and nixon.........
if the inflationary vortex starts there, it will cause all neighboring fiat regimes to crumble as the downward spiral in the vortex gathers steam and speed and the black hole of finance gets bigger and bigger. shall we in the gulag of amerika watch in awe and consternation this event, which is our future........
We just printed their GDP while you were commenting. I don't think this domino will really do anything. The PIIGS will though.
http://en.wikipedia.org/wiki/Belarus
GDP (PPP) 2010 estimate - Total $131.201 billion[3] - Per capita $13,909[3]i wss watching the history channel last night and they were talking about the drug war.......they said a kilo of coke at the source is about 2000. by the time it hits the streets in chicago , it is about 100,000. imagine what will happen to mexico if the united states goes into a inflationary vortex...
Probably accept gold as payment. I used to live near the border and traveled throughout Mexico extensively and I have never seen a narco not wearing massive gold jewelry. Plus it's in our people's history, Mexico is the largest producer of silver. Billionaire Hugo Salinas Price strongly advocates returning to a silver dollar, mexico may have the last laugh in currencies.
http://www.cobdencentre.org/2011/05/hugo-salinas-price-silver-to-be-monetised-this-year-in-mexico/
The price of a kilo of coke will drop vs gold.
Gold isn't what is wanted what is wanted is rent and women money.
It doesn't matter if rent costs a cool mill or 300$ a month that will always be the price of a gram.
The Belarusian ruble has been reduced to rubble.
"The main objectives of the National Bank (of Belarus) shall be as follows":
...priceless: "Gaining profit shall not be the main objective of the National Bank."
P.D.
As for the site of the National Bank: "It's not just you! http://nbrb.by looks down from here!"
http://www.downforeveryoneorjustme.com/the%20site%20of%20the%20National%...
It's not so extreme here on the german-swiss border, however the influx of suddenly-Euro-rich Swiss (their currency having appreciated by approx. 30% in the last 12 months) is certainly noticeable, in shops, restaurants and pubs, even 60-70 km inland.
For now that is a good thing, as there is still enough "stuff" in germany, and it keeps up the local economy (most edible stuff in the shops that is not pre-packaged comes from around here).
Funny enough, it is not Germany that has an export limit on meat, it is Switzerland that has an import limit - something like a couple of kilos - to protect (and rightly so) their local farmers.
..but you should remember that not a long time ago it was just the opposite.
Not sure how old you are, but I have to go back 45 years to remember times when we used to go shopping across the border. We used to pay something like 0,86 Deutschmark for a Swiss Franc. Shopping trip to Schaffhausen every saturday morning, then off we went to explore the swiss cities, mountain lakes and alpine passes. Very very few cars around back then. I remember I was impressed that there was warm water and background music in the restrooms of the supermarkets.
As for petrol I have to agree with you, at least for gasoline, I used to cross the border (10 mins from here) to "fill 'er up" until a few months ago.
However, I just realized that had the swiss not had protective tariffs on meat to keep their local (very high) costs/prices competitive, with travellers checked and transgressing ones heavily fined regularly at border crossings, we might have had a similar "meat exodus" to the one described in the article.
PS. Did you have to make that remark? Remembering those times so far back makes me feel old... lol.
...hahaha, but don't worry my friend, as one of your countrymen once said:
"Keep true to the dreams of thy youth"
- Friedrich von Schiller
Great reporting by Tyler, as usual. Gold wins out when central bankers gone wild rule the roost. They're all going to look like crazy scientists that blew themsleves up
Stupid post! It has nothing to do with hyperinflation, but it's just a plug for gold. Everyone should buy gold, and then buy all the meat in Belarus for 1994 scrap PC memory with gold-plated leads!
As long as long as mercantilist economies are allowed to collude with western bankers and corporate guidos to exploit floating exchange rates, then all fiat should turn to shit. And as long as you can buy gold with shit, gold is shit too. But this is too complicated for gold-bugs or Austrian School of economics types to understand. Only ex-finance types, the ones who sold you all the dot.com and net.com stocks hope to turn their amassed fiat into something worth anything. Fu*k you! You are no better than bankers and all those still working on Wall Street , and that's you TDs.
linrom, although junked, did touch on my theory that the masters of the game, because they can print funny money and "buy" gold with it, can rule us forever. We have to earn money to buy gold, while they print and obtain free all they want, (again) forever.
Is this like people using foodstamps to buy food they can punt to someone who isn't destitute?
president ordered to give-away one-time rising food price compensation packages (in the amount of 100 USD payed in local currency of cause) for pensioners and other socially endagered groups
Similar results occurred during the Irish Potato Famine. It wasn't that there was an absolute shortage of potatoes, rather it was that a better price for what remained following the blight was obtained in the export market. The end result was that the Irish couldn't afford to eat and what food was left was sold abroad. History has a nasty way of repeating itself.
No sorry, it's different..
"Clearly, during the years 1845 to 1850, the British government pursued a policy of mass starvation in Ireland with intent to destroy in substantial part the national, ethnic and racial group commonly known as the Irish People...Therefore, during the years 1845 to 1850 the British government knowingly pursued a policy of mass starvation in Ireland that constituted acts of genocide against the Irish people within the meaning of Article II (c) of the 1948 [Hague] Genocide Convention."[134]
http://en.wikipedia.org/wiki/Great_Famine_%28Ireland%29
Right. A Nation (then, Ireland) is destroyed...by destroying its urban/rural middle class. Like the Red Jews did (via Terror Famine) in White Russia, Ukraine, Kazakhstan during late 1920s-early '30s. And as the globalists intend to do now, worldwide.
The English landlords shipped the Irish produce to England and let the Irish starve.
Please note the new Indian/Chinese/Saudi land grabs in Africa.
Please note the new Indian/Chinese/Saudi land grabs in Africa.
'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
Yep but they are still behind the effort of Western countries, especially the US.
I'll take all the "shit" you have, 5000 years of human interaction can't be all wrong...
the frauderal preserve can fix this.
Bread lines bitchez!
---Becky----
Belarus Tractors can not be imported any more because they do not meet EPA standards. Australia and Viet Nam buy large numbers of them. Too bad, any 14 year old with a hammer and pocket knife can fix one.
Kinetic Meatball Confiscation
Ah yes, my family has no food. I think I shall go into my pasture where I have buried my gold coins and dig one up and take it to the market to buy food. Hmmmm. Who are these people following me home?
Have gun, will Travel.
Fertilizer for your new garden.
The problem with this is that the Russians are no fools and realize that the Belarussians will pay for a loaf of bread with silver or gold, so the exchange rate would be massively in favor of the Russians and they would NOT have preserved their purchasing power if they ever exercised the usage of gold/silver as means of exchange.
PM fanatics ignore this historical fact constantly. If you cannot exchange your PM for another currency, it is worthless when buying food and is subject to asset deflation and would be valued at pennies on the dollar just like other assets in a deflationary collapse.
Of course applying a ruling from 1948 to events a century prior is extremely logical.