The Finch Formerly Known As Gold

23 February 2007

Fiat sales and service

Also seen in the comments at TTAC, this forlorn observation:

A counterfeiter cannot go bankrupt, think Hyperinflation instead. I was in the country of Turkey in the early 90s where 1 "dollar" would buy 17,000 Turkish Lira. By the year 2001 I think it was 1.2M TL to the "dollar". I think "Lira" in Latin means "Print Me!" Inflation, created by our Central Bank Owners/Rulers, is just another method of robbing us since taxes are politically unpopular.

Shoulda been there in 1974, when $1 would buy fourteen TL. I remember griping when the exchange offices changed the rate to 13.85, not because fifteen kuruş was such a huge amount, but because we were so used to thinking in 14-to-1 terms. (Yes, we were lazy, and yes, the currency was a bit more stable in those days.)

And after all that, Turkey has a New Lira, introduced in 2005, which was defined as one million of the old lira. Last I looked, the New Lira was worth about 72 cents US.

Posted at 3:14 PM to Common Cents

Now, will the Turks continue to refrain from printing the New Lira? Antoine Pinay did virtually the same thing in France after World War II, when the old franc was just about worthless. The government wisely refrained from inflation. But if it had treated the new, "heavy franc" as it had the old one, it, too, would have become wastepaper.

Ultimately, the only preventative for this sort of currency abuse is a specie standard, preferably gold. Of course, governments hate the gold standard; it keeps them from stealing our savings.

"You have to choose (as a voter) between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And, with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."

-- George Bernard Shaw

Posted by: Francis W. Porretto at 5:34 AM on 24 February 2007

The current Turkish prime minister, Mr Erdogan, is apparently not fond of the printing press, and it was under his watch that the lira was revalued; the new lira has remained relatively stable so far. As the mutual-fund guys tell you, though, current performance is no guarantor of future results, and sooner or later someone will replace Erdogan.

Posted by: CGHill at 11:08 AM on 24 February 2007

GBS said: "I advise you, as long as the capitalist system lasts, to vote for gold."

Friend Shaw, widely regarded as a misanthrope, was insufficiently misanthropic -- he appears to believe there is any system under which the honesty and intelligence of the members of the government can ever be trusted. There is not.

Posted by: McGehee at 1:01 PM on 24 February 2007