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> There were exchange rates and everything. So did many other economic plans and countries that tried to control inflation by keeping an artificial peg to the

> There were exchange rates and everything. So did many other economic plans and countries that tried to control inflation by keeping an artificial peg to the USD. That also didn't work. > Not sure what's so special about it. That fact that it worked. That's what it is special about it. It wasn't "just the creation of another currency". It was the fact that URV allowed to de-index the economy. It made it possible for people to separate the price from the value of things when they were spending. It made it possible for people to stop rushing to gas station or the groceries as soon as they got their paycheck, because now their salaries were nominated in URV and they didn't have to spend as possible before its value corroded. It wasn't URV by itself that solved the issue of hyperinflation in Brazil. Inflation would come back if FHC didn't continue with the budget-balancing reforms, the privatizations, the increased taxes. But it was URV that gave people some faith that things could be stable, which is an absolute requirement. If people didn't believe that the money in their pockets will hold their value, they will simply spend all of it as fast as possible, which leads to... inflation. This is why I asked about your age in the other thread. You never lived in hyperinflation, so you simply can not fathom what it was like.

throwaway210222 6y ago
> You never lived in hyperinflation, so you simply can not fathom what it was like. Of course he/she can fathom what its like. You just told him/her. This you-cannot-imagine-nor-comment-on-anything-you-never-personally-experienced trope needs to stop.
- rglullis 6y ago
  I meant it in the sense of "you are downplaying the significance of it and its difference to a simple currency change because you never experienced decades of failed attempts at fixing hyperinflation." I didn't say anything to the effect of "you can not comment on it", so save your whining for something else.
matheusmoreira 6y ago
> That fact that it worked. That's what it is special about it. The fact it worked doesn't make it something more than just yet another inflationary government currency. > It was the fact that URV allowed to de-index the economy. I'm not sure what it means to "de-index" the economy. > It made it possible for people to separate the price from the value of things when they were spending. The value of things in URV is just another price quoted in a different currency. Not sure what magic they performed to convince everyone that these prices would remain stable but that doesn't mean it's anything other than a new currency. Look at real now. Look at the dollar. They print trillions of them like it's nothing. > because now their salaries were nominated in URV I suppose things like this made it easy for the population to get used to the new currency. > If people didn't believe that the money in their pockets will hold their value, they will simply spend all of it as fast as possible, which leads to... inflation. Naturally. When this happens, the solution is always to create a new currency. The old one cannot be saved without deflationary monetary policy which no country will ever adopt. I have no idea what exactly convinced the masses that real was viable. Obviously it was going to inflate just like the rest, just at different rates. To me it sounds like the government just forced it on everyone until they got used to thinking in terms of real prices. > This is why I asked about your age in the other thread. You never lived in hyperinflation, so you simply can not fathom what it was like. Not at an emotional level, no. I do understand it at an intellectual level. Just yet another stupid problem created by governments irresponsibly printing money. Why nations even insist on creating these shitcoins is beyond me. I guess they enjoy the ability to screw up the economy.
- rglullis 6y ago
  > The fact it worked doesn't make it something more than just yet another inflationary government currency. Calm down, Michael Saylor. Not only we are talking about the 90's here in a country that barely had dial-up internet at the time, you are also confusing monetary policy with economic policy. > I'm not sure what it means to "de-index" the economy. Because of inflation, most people would only agree to long term contracts (like salaries, rent, utilities) and investments if the prices were adjusted to a previously defined index. Eg., property owners could have in the contract that the rent would increase monthly by 30%, and that this would be revised every 6 months (or year, or whatever). Because of high inflation, renters would take that without even batting an eye. They would also have their salaries indexed as such, so all prices would increase all the time. Basically, inflationary inertia. This inertia would also affect government contracts, public sector employees and even your tax returns. The government couldn't simply just say "ok, we are not printing any more money", because they had obligations done in the past. So, it was with URV where they could say "Make all the contracts with prices denominated in URV and forget the cruzeiro-indexed readjustments". This is what means to "de-index" the economy. > To me it sounds like the government just forced it on everyone until they got used to thinking in terms of real prices. Well, yes to an extent. But the alternative was much worse: the government was schizophrenically forcing price controls and putting preset price indexes on some sectors. Price controls brought nothing but empty shelves in the supermarkets (because producers would rather not make something than being forced to make it at a loss) and the indexation was only good for the rich people who could invest. > Just yet another stupid problem created by governments irresponsibly printing money. Again, you are confusing monetary and economic policy. Like you said, the US is printing money like crazy; but no sane person worries about them getting into hyperinflation. The Eurozone is the same, Japan's has now almost 10 years of Abenomics and still does not even get close to 2% annual inflation. Take it from someone who is so into crypto and DeFI that I am actually having problems with my accountant to file my taxes this year: It's very easy to try to reduce all complex problems into one single variable, but "governments are stupid because they print money" is not a smart take.

throwaway210222 6y ago

> You never lived in hyperinflation, so you simply can not fathom what it was like. Of course he/she can fathom what its like. You just told him/her. This you-cannot-imagine-nor-comment-on-anything-you-never-personally-experienced trope needs to stop.

rglullis 6y ago
I meant it in the sense of "you are downplaying the significance of it and its difference to a simple currency change because you never experienced decades of failed attempts at fixing hyperinflation." I didn't say anything to the effect of "you can not comment on it", so save your whining for something else.

matheusmoreira 6y ago

> That fact that it worked. That's what it is special about it. The fact it worked doesn't make it something more than just yet another inflationary government currency. > It was the fact that URV allowed to de-index the economy. I'm not sure what it means to "de-index" the economy. > It made it possible for people to separate the price from the value of things when they were spending. The value of things in URV is just another price quoted in a different currency. Not sure what magic they performed to convince everyone that these prices would remain stable but that doesn't mean it's anything other than a new currency. Look at real now. Look at the dollar. They print trillions of them like it's nothing. > because now their salaries were nominated in URV I suppose things like this made it easy for the population to get used to the new currency. > If people didn't believe that the money in their pockets will hold their value, they will simply spend all of it as fast as possible, which leads to... inflation. Naturally. When this happens, the solution is always to create a new currency. The old one cannot be saved without deflationary monetary policy which no country will ever adopt. I have no idea what exactly convinced the masses that real was viable. Obviously it was going to inflate just like the rest, just at different rates. To me it sounds like the government just forced it on everyone until they got used to thinking in terms of real prices. > This is why I asked about your age in the other thread. You never lived in hyperinflation, so you simply can not fathom what it was like. Not at an emotional level, no. I do understand it at an intellectual level. Just yet another stupid problem created by governments irresponsibly printing money. Why nations even insist on creating these shitcoins is beyond me. I guess they enjoy the ability to screw up the economy.

rglullis 6y ago
> The fact it worked doesn't make it something more than just yet another inflationary government currency. Calm down, Michael Saylor. Not only we are talking about the 90's here in a country that barely had dial-up internet at the time, you are also confusing monetary policy with economic policy. > I'm not sure what it means to "de-index" the economy. Because of inflation, most people would only agree to long term contracts (like salaries, rent, utilities) and investments if the prices were adjusted to a previously defined index. Eg., property owners could have in the contract that the rent would increase monthly by 30%, and that this would be revised every 6 months (or year, or whatever). Because of high inflation, renters would take that without even batting an eye. They would also have their salaries indexed as such, so all prices would increase all the time. Basically, inflationary inertia. This inertia would also affect government contracts, public sector employees and even your tax returns. The government couldn't simply just say "ok, we are not printing any more money", because they had obligations done in the past. So, it was with URV where they could say "Make all the contracts with prices denominated in URV and forget the cruzeiro-indexed readjustments". This is what means to "de-index" the economy. > To me it sounds like the government just forced it on everyone until they got used to thinking in terms of real prices. Well, yes to an extent. But the alternative was much worse: the government was schizophrenically forcing price controls and putting preset price indexes on some sectors. Price controls brought nothing but empty shelves in the supermarkets (because producers would rather not make something than being forced to make it at a loss) and the indexation was only good for the rich people who could invest. > Just yet another stupid problem created by governments irresponsibly printing money. Again, you are confusing monetary and economic policy. Like you said, the US is printing money like crazy; but no sane person worries about them getting into hyperinflation. The Eurozone is the same, Japan's has now almost 10 years of Abenomics and still does not even get close to 2% annual inflation. Take it from someone who is so into crypto and DeFI that I am actually having problems with my accountant to file my taxes this year: It's very easy to try to reduce all complex problems into one single variable, but "governments are stupid because they print money" is not a smart take.