How money really works

Some economists in Brazil tricked the people into a stable economy.

People have to be tricked into thinking money will hold its value.

The four economists wanted to create a new currency that was stable, dependable and trustworthy.  The only catch: This currency would not be real.  No coins, no bills.  It was fake.

….  All prices were listed in URVs.  And URVs were kept stable — what changed was how many cruzeiros each URV was worth.Say, for example, that milk costs 1 URV. On a given day, 1 URV might be worth 10 cruzeiros. A month later, milk would still cost 1 URV. But that 1 URV might be worth 20 cruzeiros.

The idea was that people would start thinking in URVs — and stop expecting prices to always go up.

One response to “How money really works

  1. Brazil had OTN’s years ago. Same concept as URV’s. I recall paying for German lessons (of all things) in OTN’s. These were banking fictions, nothing you ever saw stamped on a can or a box. Whether or not Brazilians were fooled by any of this (and I sure wouldn’t trust NPR to tell me), I think what got Brazilians less inflation-complaisant was the government’s veering away from setting the prices of EVERYTHING. For those German lessons, I went looking for a Portuguese-German dictionary; the price seemed high in the first bookstore I went to; they weren’t bothered by my saying I was going to look in other stores, because the price had been set by the government. It’s a devotedly loopy nation that sets the price even of THIS commodity.