4 ms·

In Russia, a period of high inflation in 1990s and early to mid 2000s made people simply think in dollars. Whatever price or income you get, you just convert in

In Russia, a period of high inflation in 1990s and early to mid 2000s made people simply think in dollars. Whatever price or income you get, you just convert into dollars in your head and now you know what it's worth. Saving were only USD cash. Although inflation is long gone, people over 35-40 still think this way to this day In Belarus, where there is no high inflation, but just periodic (once in 3-7 years) sudden devaluations of the local currency, people always think in dollars, and many employers set salaries in dollars too. Even government sets rent on government property and some taxes in dollars or euros just to avoid the hassle of recalculating it too often. After a while, people got used to it and it's not a problem at all - no one but government employees who get salaries in local currency, is even worried about the exchange rate (and those employees can't survive on salaries anyway - they are dependent on bribes as salaries are laughable - and bribes are in USD).

gabythenerd 5y ago
Venezuela sounds exactly like Belarus, bribes are expected for common state procedures, even with those that the government already set in dollars like getting a passport.
- deadalus 5y ago
  Venezuala ranks 177th out of 180 in the latest Corruption Perceptions Index (CPI) : https://www.transparency.org/en/cpi/2021 https://www.transparency.org/en/cpi/2021
foobarian 5y ago
In ex-Yugoslavia, due to large numbers of people guest-working in Germany, we ended up de-facto pinned to Deutschmarks. One of my favorite memories is watching the news where Ante Marković announced the denomination of the dinar, where they basically ran out of room on the bills for all the zeros and so just declared that henceforth they would print "new dinars" which are same as "old dinars" but without the trailing 4 zeros. Marković waved one of those bills in front of the parliament, started laughing with joy, and there was applause. [1] [1] https://youtu.be/G3dSOfoQiaY https://youtu.be/G3dSOfoQiaY Of course what I didn't understand at the time is that they also officially pegged the exchange rate to the German Mark, which made the currency convertible and stabilized the inflation rate. Now I see that deleting the zeros was mostly showmanship (though it helped lessen the confusion).
- keiferski 5y ago
  Bosnia still has the mark. It’s an interesting link to the past. Initially the mark was pegged to the German mark at par. Since the replacement of the German mark by the euro in 2002, the Bosnian convertible mark uses the same fixed exchange rate to euro that the German mark had (that is, 1 EUR = 1.95583 BAM). https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_convertible_mark https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_conve...
  - foobarian 5y ago
    That is amazing. Straight out of an episode of Top Lista Nadrealista.
    - sasawpg 5y ago
      Don't think I ever expected to see that reference here!!
      - NikolaNovak 5y ago
        Oh it's all about Hrkljuš :)
- selimthegrim 5y ago
  Well, that clears things up.
spuz 5y ago
This is known as currency substitution or dollarization and can be done officially or unofficially. But what happens when the world's currency also inflates? https://en.m.wikipedia.org/wiki/Currency_substitution https://en.m.wikipedia.org/wiki/Currency_substitution
- adventured 5y ago
  > But what happens when the world's currency also inflates? It's a relative premise of course. The USD Index [1][2] (currently over 97 and rising) indicates the USD isn't being debased at a faster rate than the other major currencies. The EU, China and Japan have debt & spending problems every bit as bad as the US (with the EU and Japan having far worse growth problems), choking at their economic and political systems persistently and requiring forever interest rate games. So if, this decade, Argentina's currency debases at 20% per year and the USD debases at 5% per year, and there are no superior alternatives in the currency realm (eg the other major currencies are doing something similar), you'll largely mentally disregard the USD inflation, as all the major boats are getting the same tide, and your USD choice is still the right one vs the local currency. And if you can, you may properly choose to diversify whenever possible into inflation hedging assets with surplus cash, trying to balance holding enough transactional USD vs inflation hedges to limit some of the USD damage. [1] https://finviz.com/futures_charts.ashx?p=d1&t=DX https://finviz.com/futures_charts.ashx?p=d1&t=DX [2] https://www.investopedia.com/terms/u/usdx.asp https://www.investopedia.com/terms/u/usdx.asp
throwaway22032 5y ago
> Although inflation is long gone Well, you say this, but then there was that time in 2014 when the ruble went from about 40 RUB/USD to 60-70RUB/USD...
- anovikov 5y ago
  That's true, but there wasn't any super major inflation spike. Everything just became cheaper in dollars.
marcodiego 5y ago
We had what we called "hiper-inflação" (hyper-inflation) in Brazil during the late 80's and early 90's. My father calculated the prices in gasoline liters.

gabythenerd 5y ago

Venezuela sounds exactly like Belarus, bribes are expected for common state procedures, even with those that the government already set in dollars like getting a passport.

deadalus 5y ago
Venezuala ranks 177th out of 180 in the latest Corruption Perceptions Index (CPI) : https://www.transparency.org/en/cpi/2021 https://www.transparency.org/en/cpi/2021

foobarian 5y ago

In ex-Yugoslavia, due to large numbers of people guest-working in Germany, we ended up de-facto pinned to Deutschmarks. One of my favorite memories is watching the news where Ante Marković announced the denomination of the dinar, where they basically ran out of room on the bills for all the zeros and so just declared that henceforth they would print "new dinars" which are same as "old dinars" but without the trailing 4 zeros. Marković waved one of those bills in front of the parliament, started laughing with joy, and there was applause. [1] [1] https://youtu.be/G3dSOfoQiaY https://youtu.be/G3dSOfoQiaY Of course what I didn't understand at the time is that they also officially pegged the exchange rate to the German Mark, which made the currency convertible and stabilized the inflation rate. Now I see that deleting the zeros was mostly showmanship (though it helped lessen the confusion).

keiferski 5y ago
Bosnia still has the mark. It’s an interesting link to the past. Initially the mark was pegged to the German mark at par. Since the replacement of the German mark by the euro in 2002, the Bosnian convertible mark uses the same fixed exchange rate to euro that the German mark had (that is, 1 EUR = 1.95583 BAM). https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_convertible_mark https://en.m.wikipedia.org/wiki/Bosnia_and_Herzegovina_conve...
- foobarian 5y ago
  That is amazing. Straight out of an episode of Top Lista Nadrealista.
  - sasawpg 5y ago
    Don't think I ever expected to see that reference here!!
    - NikolaNovak 5y ago
      Oh it's all about Hrkljuš :)
selimthegrim 5y ago
Well, that clears things up.

spuz 5y ago

This is known as currency substitution or dollarization and can be done officially or unofficially. But what happens when the world's currency also inflates? https://en.m.wikipedia.org/wiki/Currency_substitution https://en.m.wikipedia.org/wiki/Currency_substitution

adventured 5y ago
> But what happens when the world's currency also inflates? It's a relative premise of course. The USD Index [1][2] (currently over 97 and rising) indicates the USD isn't being debased at a faster rate than the other major currencies. The EU, China and Japan have debt & spending problems every bit as bad as the US (with the EU and Japan having far worse growth problems), choking at their economic and political systems persistently and requiring forever interest rate games. So if, this decade, Argentina's currency debases at 20% per year and the USD debases at 5% per year, and there are no superior alternatives in the currency realm (eg the other major currencies are doing something similar), you'll largely mentally disregard the USD inflation, as all the major boats are getting the same tide, and your USD choice is still the right one vs the local currency. And if you can, you may properly choose to diversify whenever possible into inflation hedging assets with surplus cash, trying to balance holding enough transactional USD vs inflation hedges to limit some of the USD damage. [1] https://finviz.com/futures_charts.ashx?p=d1&t=DX https://finviz.com/futures_charts.ashx?p=d1&t=DX [2] https://www.investopedia.com/terms/u/usdx.asp https://www.investopedia.com/terms/u/usdx.asp

throwaway22032 5y ago

> Although inflation is long gone Well, you say this, but then there was that time in 2014 when the ruble went from about 40 RUB/USD to 60-70RUB/USD...

anovikov 5y ago
That's true, but there wasn't any super major inflation spike. Everything just became cheaper in dollars.

marcodiego 5y ago

We had what we called "hiper-inflação" (hyper-inflation) in Brazil during the late 80's and early 90's. My father calculated the prices in gasoline liters.