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Adopt US dollar as your national currency; Here are all the countries that does it; http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/ ht

by known 10y ago

Adopt US dollar as your national currency; Here are all the countries that does it; http://qz.com/260980/meet-the-countries-that-dont-use-their-own-currency/ http://qz.com/260980/meet-the-countries-that-dont-use-their-...

deleted 10y ago
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- deleted 10y ago
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tomjen3 10y ago
That would require Venezuela's politicians to do something sensible, which they have shown a remarkable desire to avoid at any cost.
geofft 10y ago
Are there countries that peg their currencies to combinations of other countries' currencies, mutual-fund-style, so you're not dependent on one single country's economy and politics remaining stable? I'd imagine that pegging your currency to, say, a linear combination of the UN Security Council members' currencies, weighted to get you about equal purchasing power on each currency, would be a good way to hedge risk. (Or is there a some economic reason this is a terrible idea?)
- twelvechairs 10y ago
  China has done this. It has been pegged to a (somewhat secretive) basket of foreign currencies for some time. Before that it was pegged to USD.
  - jaza 10y ago
    That's right. Pegging a currency does of course have its advantages and disadvantages - in China's case, it's worked out very well for their economy (and for some groups of people in China, though certainly not for everyone). https://en.wikipedia.org/wiki/Renminbi https://en.wikipedia.org/wiki/Renminbi
  - rebuilder 10y ago
    Apparently, since January 2016, they switched back to a US peg. (According to Investopedia.)
- viraptor 10y ago
  They'd still have to create a new currency that way. And you can't force a value on that one. Sure, it could have the value you want on paper, but just like the current one - it wouldn't match the usage in practice. Adopting another currency makes sense if it's easy to do a lot of trade using it. The closer you are to other $ users then, the closer the real value, because you can easily trade outside of the local bubble. (It could work of course (and did for some countries)... but you still need to have actual well working trade to make sure the currency has the value you expect)
- AnAfrican 10y ago
  It's neither a good nor a bad idea. The point of pegging your currency to a foreign currency is to rebuild trust in your currency by guaranteeing a fixed exchange rate. But if you do that by pegging to multiple currencies that all have variable exchange rates, how do you handle the relative changes between them ? The only way would to be adjust it almost daily. Which is the same thing as letting it float. ++ PS: I'm talking about a somehow hard peg here. Most countries tend to use targets and will try to maintain some levels of rate. But they do so by operation on the market rather a peg by fiat.
omegaworks 10y ago
Peg your country's currency to one controlled by a foreign power. It turned out so well for Greece!
- AnAfrican 10y ago
  It has turned out well for a bunch of countries. But only as a transition measure, to rebuild trust.
  - planteen 10y ago
    For example, Ecuador uses the US dollar. https://en.wikipedia.org/wiki/Currency_of_Ecuador https://en.wikipedia.org/wiki/Currency_of_Ecuador
gozur88 10y ago
You're missing the whole point of hyperinflation. The government is printing money to pay expenses, like salaries and military expenditures. If they adopted the dollar they'd lose the ability to do that.
- Dylan16807 10y ago
  Is that really the main cause of their inflation? It's trivial to fix that cause; for example give each governmental department a budget that increases 5% per month and not a penny more.
  - deleted 10y ago
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  - ufo 10y ago
    Yes, printing money is the root cause of the inflation. But no, you can't just make a trivial fix like you said. Venezuela has a dysfunctional government that used to be propped up by oil exports back when oil used to be a highly-priced commodity. After the crash in oil prices, the sorce of income dried up and revealed huge flaws in the country's infrastructure and government inefficiency and corruption.
    - Dylan16807 10y ago
      Printing no money is the default option. Dysfunction and corruption certainly make fixing everything extremely difficult, but you don't have to fix the government to stop the hyperinflation. If you cut off access to whatever printing press or computer is making the money, then there would not be hyperinflation. It being an insufficient fix does not stop it from being trivial and performing its stated goal.
      - ufo 10y ago
        Stopping the flow of money without restructuring the government would result in a total government shutdown and complete chaos. It is not an option.

by known 10y ago

deleted 10y ago

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deleted 10y ago
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tomjen3 10y ago

That would require Venezuela's politicians to do something sensible, which they have shown a remarkable desire to avoid at any cost.

geofft 10y ago

Are there countries that peg their currencies to combinations of other countries' currencies, mutual-fund-style, so you're not dependent on one single country's economy and politics remaining stable? I'd imagine that pegging your currency to, say, a linear combination of the UN Security Council members' currencies, weighted to get you about equal purchasing power on each currency, would be a good way to hedge risk. (Or is there a some economic reason this is a terrible idea?)

twelvechairs 10y ago
China has done this. It has been pegged to a (somewhat secretive) basket of foreign currencies for some time. Before that it was pegged to USD.
- jaza 10y ago
  That's right. Pegging a currency does of course have its advantages and disadvantages - in China's case, it's worked out very well for their economy (and for some groups of people in China, though certainly not for everyone). https://en.wikipedia.org/wiki/Renminbi https://en.wikipedia.org/wiki/Renminbi
- rebuilder 10y ago
  Apparently, since January 2016, they switched back to a US peg. (According to Investopedia.)
viraptor 10y ago
They'd still have to create a new currency that way. And you can't force a value on that one. Sure, it could have the value you want on paper, but just like the current one - it wouldn't match the usage in practice. Adopting another currency makes sense if it's easy to do a lot of trade using it. The closer you are to other $ users then, the closer the real value, because you can easily trade outside of the local bubble. (It could work of course (and did for some countries)... but you still need to have actual well working trade to make sure the currency has the value you expect)
AnAfrican 10y ago
It's neither a good nor a bad idea. The point of pegging your currency to a foreign currency is to rebuild trust in your currency by guaranteeing a fixed exchange rate. But if you do that by pegging to multiple currencies that all have variable exchange rates, how do you handle the relative changes between them ? The only way would to be adjust it almost daily. Which is the same thing as letting it float. ++ PS: I'm talking about a somehow hard peg here. Most countries tend to use targets and will try to maintain some levels of rate. But they do so by operation on the market rather a peg by fiat.

omegaworks 10y ago

Peg your country's currency to one controlled by a foreign power. It turned out so well for Greece!

AnAfrican 10y ago
It has turned out well for a bunch of countries. But only as a transition measure, to rebuild trust.
- planteen 10y ago
  For example, Ecuador uses the US dollar. https://en.wikipedia.org/wiki/Currency_of_Ecuador https://en.wikipedia.org/wiki/Currency_of_Ecuador

gozur88 10y ago

You're missing the whole point of hyperinflation. The government is printing money to pay expenses, like salaries and military expenditures. If they adopted the dollar they'd lose the ability to do that.

Dylan16807 10y ago
Is that really the main cause of their inflation? It's trivial to fix that cause; for example give each governmental department a budget that increases 5% per month and not a penny more.
- deleted 10y ago
  [deleted]
- ufo 10y ago
  Yes, printing money is the root cause of the inflation. But no, you can't just make a trivial fix like you said. Venezuela has a dysfunctional government that used to be propped up by oil exports back when oil used to be a highly-priced commodity. After the crash in oil prices, the sorce of income dried up and revealed huge flaws in the country's infrastructure and government inefficiency and corruption.
  - Dylan16807 10y ago
    Printing no money is the default option. Dysfunction and corruption certainly make fixing everything extremely difficult, but you don't have to fix the government to stop the hyperinflation. If you cut off access to whatever printing press or computer is making the money, then there would not be hyperinflation. It being an insufficient fix does not stop it from being trivial and performing its stated goal.
    - ufo 10y ago
      Stopping the flow of money without restructuring the government would result in a total government shutdown and complete chaos. It is not an option.