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Comment by idlewords | Hacker News Reader

In Poland (and I imagine other socialist countries), people who made a bunch of money took pains not to get stuck with cash, for exactly this reason.

Since it was illegal to own foreign currency, a popular solution was to buy and store grain alcohol, on the assumption that no conceivable change in political system would ever make booze lose its value.

The approach had two main drawbacks - you needed a fair amount of space to store large quantities of ethanol, and you had to safeguard the storage room against the depredations of local aficionados.

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I grew up in Costa Rica in the late 70's and early 80's. The country had massive currency devaluation because they started printing massive quantities of currency to pay their foreign debt. The exchange rate went from 8 Colones : $1 to 130:$1 in a matter of a few short years.

People started hoarding dollars and those that had commodities did very well. There was a very brisk black market trade in foreign currencies.

My father purchased a small car, at the begining of the currency crash and frove it into the ground on the terrible riural roads and then sold it 5 years later. He made a $30 profit on the deal because car prices had gone up so dramatically.

We did fine, because we got paid in dollars, but the people around us really suffered.

The hyperinflationary meltdown in Zimbabwe comes to mind as well. I bought a number of 100 Trillion zimdollar notes off ebay and handed them out at work. Each person I handed one to, I told them about how they tried to handle the inflation by chopping zeros off at the end, until this year when they cut 12 zeros off the end of numbers and shortly afterwards stopped printing their own currency.

Before my father was born, his family lived in Germany and because they had their wealth in US dollars, they were spared the trauma of the German hyperinflation of the 20s. Many of the people he knew growing up had been wiped out by that period.

What a mess. It could happen here.

I just spoken with a Zimbabwean (in South Africa). What happened in Zim is a fuckup. This guy's sister was raped (and eventually killed herself in South Africa).

There money is less than worthless. The only thing that saves the populace is subsistance farming and money from people working (illegally) in South Africa.

Yes, you are correct in respect with local currency. However, in my country there used to be quite vibrant currency black market instead of alcohol storing. People most often replaced all excess local currency with deutsch marks. At the expense of exorbitant fees, of course. But it was still better to have some deutsch marks than none.

All of it was of course illegal, but the government wasn't too keen to penalise such behaviour. At least I don't remember anyone getting caught.

It depends on the country and the time period. There were stretches of time in Poland when being caught with a substantial amount of foreign currency would have meant heavy jail time (for the crime of 'speculation'). But no one in history has ever gone down for having too much hooch.

I'm talking about Yugoslavia and 80s. Borders were officially quite tight (you couldn't import anything beyond some small value), but lots and lots of people used illegally traded foreign currency to buy food, clothes, toys, computers(yes, you could not buy zx spectrum in Yugoslavia), etc. and bring it illegally over the border.

It is likely that things were different in 70s and even before that, because rules relaxed a bit in the 80s.

But no one in history has ever gone down for having too much hooch.

Except for the United States in the 1920s.

They went down on not paying income tax on the proceeds of selling that hooch. If they just had it in a closet somewhere, it is doubtful that the government would ever find out.

That's how they got the higher-ups in the organization, but lots of people were arrested for simply having it. That's what allowed a black market to form in the first place.

The automatic response of the North Korean government would be introducing a prohibition. Or maybe that already happened, who knows.

They don't even need to go that far. They can just ration supply, forbid stockpiling and fix the price to artificially low levels.

This was occurring as recently as last year all over the world when commodity/food prices spiked. Anywhere you see black markets, you can find rationing and price fixing nearby.

Yes. Why would you need a blackmarket, if that were not the case?

The reverse is often true as well. Anywhere you see rationing and price fixing, you can find black markets nearby, assuming the distortion is high enough.

Yes, seems like trying to stop free markets from developing is just like trying to hide information or keep a theatre free of ringing phones. It can be tried, and sometimes even successful, but gosh it's a lot of work.

According to the article, it's not illegal for North Koreans to hold foreign currency.

I was in North Korea back in August, and bought one of each denomination as a souvenir. Guess they're going to be more valuable now.

Foreigners are not allowed to spend the North Korean won within the country. Instead, you pay in RMB, EUR, USD at locations approved to take foreign currency -- so we couldn't just go buy stuff at the same stores as the locals. Now I'm wondering how much of that foreign currency makes it back to the central government, given this news.

All of it. That was the exact purpose of similar measures and stores for tourists holding valuable and scarce foreign currency ("valyuta") in the Soviet Union (where I come from).

My grandma used to tell me a similar story about her old country (Burma) except they used gold jewelry.

Gold jewelry's pretty popular in India for about the same reason.

I believe German Jews bought a lot of jewelery in the late 1930's for...similar reasons. It was easier to hide than cash, and they could always try to pass it off as some family heirloom with no more than sentimental value.

Voltaire: "Paper money eventually returns to its intrinsic value - zero."

Voltaire would have been referring to this: http://en.wikipedia.org/wiki/Mississippi_Company and John Law: http://en.wikipedia.org/wiki/John_Law_%28economist%29

Read about it last night. The first stock market bubble. Far out... one Ken Layesque figure named John Law took over the entire French economy with his pyramid scheme, giving France its first paper money, for a while.

Even now? Then better bring gold back into the market ...

No. (You are not from Europe, right?)

Ah, no ... but from another "socialist country" (China) :O

Actually I'm currently in Germany so I was quite surprised by that. Seems it was quite some time ago, though. Sorry, my fault :|

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