Bill Bonner – Bill Bonner’s Diary (United States) –
BALTIMORE – Funny money is getting funnier and funnier.
Our challenge is to figure out who’s the butt of the joke.
We have a brother who is a realtor in Virginia. This past weekend, he was busy entertaining a group of Chinese visitors.
“What are the Chinese doing in rural Virginia?” we wondered.
The answer was in The New York Times. It was:
…part of an exodus of wealth outside the country, as people in China look to diversify at a time of worries about the slowing economy and the country’s growing political and social challenges. But China heavily restricts the flow of money out of the country…
Everyone seems to want to get clear of his own currency and into someone else’s – especially the dollar.
Much of this refugee money ends up in real estate. Unlike bankers, real estate salesmen don’t ask questions. “Just show me the money,” they say.
Manhattan, Los Angeles, Miami, and San Francisco – and even central Virginia – are being bought by foreigners eager to protect themselves from their own funny monies.
Meanwhile, a friend in India comments on the recent decision by the government there to ban large-denomination banknotes:
What happens when you suck out 86% of the currency in an economy where cash accounts for over 90% of all transactions?
And where hundreds of millions of people don’t have access to credit cards or debit cards and have never owned a smartphone – or are not literate enough to use these “modern-day essentials”?
And how do you measure the loss of productivity of an estimated 100 million people standing in lines over 55 days changing… a total of 25 billion pieces of paper…?
What happens? You have a monetary disaster. Which is what is happening in India now.
The amazing thing is the typical Indian seems to believe it is for his own good. He thinks the cash ban is intended to inconvenience criminals, hardly noticing that it is he who is most inconvenienced!
Our friend reminds us of a dictum attributed to Mark Twain: “It’s easier to fool people than to convince them they have been fooled.”
Venezuelan President Nicolás Maduro tells his compatriots that he is separating “fraudsters and Mafiosi” from the “fruit” of their racket.
By depriving them (and everyone else) of the use of the nation’s trash currency, the bolivar, Maduro is taking nearly half of Venezuela’s banknotes out of circulation.
Bolivar banknotes were already on their way to extinction, thanks to the federales’ habit of printing them like Watchtower leaflets.
Now, Venezuelan funny money banknotes lose half their value every 17 days, putting the bolivar in the “hyperinflation” category.
And the Venezuelan feds claim criminals have been stockpiling them!
Again, it’s amazing what people will believe and put up with. Venezuelans already spend as much as six hours in line at ATMs or banks to get enough cash to do their daily shopping.
Naturally, ATMs run hot and break down. Or they simply run out of cash. It takes 32 100-bolivar notes (worth just US$0.03 each) to buy a kilo of tomatoes.
Over in Anatolia, Turkish President Recep Erdoğan didn’t think it was funny when he faced an attempted military coup in July.
Once warned, he’s now twice shy. “Someone is trying to force this country to its knees by economic sabotage,” he claims.
As in Venezuela, the saboteurs seem most interested in escaping the nation’s funny money. Erdoğan offers this suggestion: “For those who have foreign currencies under the pillow, come change this to gold… come change this to Turkish lira.”
We’re not sure what practical joke he is playing… but we’d be a little wary of showing up with a big pile of Ben Franklins.
And in Italy, voters have rejected constitutional reforms put forward by the country’s former pro-European Union Prime Minister Matteo Renzi.
Following the referendum’s defeat, Renzi stepped down. And Beppe Grillo, a comedian-turned-politician and leader of the populist Five Star Movement, says Italy needs two funny monies, not just one.
He would stick with the euro for foreign transactions and create a new national funny money for scamming the homies.
But it is back in the USA where the world’s funniest money is found.