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Your comment suggests you've never lived in a country where you would want/need to exchange your currency. The smart money (I.e. politically well connected) ge
by irixusr 11y ago
Your comment suggests you've never lived in a country where you would want/need to exchange your currency.
The smart money (I.e. politically well connected) gets to exchange their money. As soon as every one else finds out, capital controls have been introduced.
The politically well connected, usually, get to continue exchanging their money at an artificial rate.
- lgieron 11y agoThe idea is to be exchanging them _in_advance_, i.e. exchanging the savings part of your monthly salary to USD every month. Don't wait till the shit hits the fan and everybody wants to get rid of their local money.
- irixusr 11y agoA country cannot have a widely distrusted currency for long, because everyone will do as you say (exchange away).This causes capital flight, so the gov't introduces capital controls shortly thereafter. So the only way to do as you say is to be (far) more prescient than your peers. You need to be far more prescient because you have to beat the gov't insiders too. Also, prescience does not save your future earnings (I.e. after controls have been imposed) Or you take a risk and use the black market