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Comment by eru | Hacker News Reader

Turkey dropped six zeroes off their currency in the 2000s.

Technically, you could describe that as cutting 999,9999/1,000,000 of their money supply. (Especially if they had done a funny dance like the Finnish, where you would use some scissors to only keep the tiny top left corner of your old notes, and can exchange that for new ones.)

In practice, people saw the Turkish currency reform as merely a cosmetic change, not an actually reduction in the money supply.

See https://en.wikipedia.org/wiki/Revaluation_of_the_Turkish_lir...

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This is one of those measures that hyperinflation countries have to adopt for sanity, re-numbering the money.

The surprising case that worked is the Brazilian "Real": by renaming the currency as well as switching it to semi-controlled exchange rates, inflation was drastically reduced. https://en.wikipedia.org/wiki/Plano_Real

> Combined with all previous currency changes in the country's history, this reform made the new real equal to 2.75 × 1018 (2.75 quintillion) of Brazil's original réis.

(!)

Renaming didnt drastically reduce inflation. If it were that easy everybody would do it. It just allowed the government to reduce inflationary expectations while they did the legwork of throttling spending, etc.

If they hadnt done the legwork to reduce inflationary pressures this parlor trick would not have worked.

And, arguably, if they hadnt done it at all, inflation would still have gone down simply by reducing the inflationary pressures.

Romania dropped several zeros in 2005, so 1,000,000 became 100. As someone who was around at that time, I still tend to think of prices in the old system, which makes me look ridiculous to younger people and even most of my same-age peers.

Albania dropped a single zero way back in the mid-20th century, and yet even generations born long after that still think of prices in the old system. The first time I went to Albania, I was paranoid and made a scene in shops, thinking every shopkeeper was trying to rip me, a foreigner, off by quoting a price an order of magnitude higher. My face was red when someone finally explained how the country works.

>In practice, people saw the Turkish currency reform as merely a cosmetic change, not an actually reduction in the money supply.

Because it is just cosmetic. Governments chronically think they can directly legislate more value into existence. They fail to understand that currency is just an intermediary for trading labor.

No, no, at the time Turkey had actually done all the hard work of getting their currency (mostly) in order. They (or at least the technocrats running the central bank) knew perfectly well that they can't "directly legislate more value into existence".

The extra zeros were just a bit of an embarrassing hangover from wilder times in the past.

Alas, the quality of Turkey's monetary policy has since dropped again.

Brazil has cut 3 zeroes from the currency many times.

It's actually no big deal if you change the currency name. Cutting the zeroes isn't supposed to have any impact except on making prices easier to write, so you only need to avoid confusion.

Would've been funny if you had been expected to literally cut out six zeroes from the notes.

In 1963 Finland also ended up shifting markka to the right by two, so that the old markka became the new penni (1/100 markka).

> Especially if they had done a funny dance like the Finnish, where you would use some scissors to only keep the tiny top left corner of your old notes, and can exchange that for new ones.

We didn't: we just printed new money, and exchanged it 1 million:1 with the old one.

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