Musings

I’ve noticed quite a large number of folks who grew up during the great depression in America or places with a lot of political upheavals, tend to not really trust banks nor the stability of governments. This is especially noticeable in folks who came from places like pre-1949 China, central europe, Russia, Ukraine, etc … before 1945, Korea, etc …

Even today in places like China, Taiwan, India, etc … people still don’t trust paper currency and only really consider gold to be the only true “real” currency. One just has to see all the episodes of hyperinflation over the decades, such as 1920’s Weimar Germany, 1990’s Yugoslavia, 1980’s Israel, post-WW1 Austria, post-Soviet Ukraine, Argentina, Saddam’s Iraq, etc … It can make one very cynical about how governments will almost always resort to printing up money to solve its problems. The last time this was a problem in America, inflation was as high as 20% per annum around the end of the Carter administration in 1980.

Well, yes, Jacques, I think that the degree of security and consequent beliefs of your father and yours could not be more different. And yes, to some extent I believe that a real, full human being should have experienced at least a fraction of your father’s life - otherwise something is missing.

Everytime I look at the history of the World War II and the history of antisemitism in particular, I get very sad and upset. What the Nazis were doing was worse than any other political sickness I’ve ever criticized. And their guilt was so large that they can’t handle it themselves.

Even the people who were effectively helping them - like Chamberlain and Daladier - did enough wrong things to deserve the prison for decades. Nazis should have been stopped as early as in 1936.

The golden standard was, when you were a kid, a completely rational and commonsense approach, I think.

I don’t think it’s true that in places like China, Taiwan and India… people only consider gold the real currency. In these areas, paper currency has been used for a real long long time in history. As for the chinese currency, it pegs to the dollar at least for now.

Some said:
“It’s ironic that they consider the Chinese Yuan to be a “hard” currency these days, considering it was a very unreliable currency for many decades previously. Many folks think that once the Yuan gets unpegged and starts to float, its value will go up.”

What makes you believe Yuan was unreliable for several decades previously? The fact is exactly to the opposite. Prior to Deng’s reform, which started in 1979, China has a fixed pricing system where the government has a tight control on prices of goods. The prices are essentially fixed for decades without any fluctuation at all. In that sense Yuan was very reliable. Too reliable I would say.

For example, cane sugars was sold at that time for 14.7 cents (of Yuan) per half kilogram. The official conversion rate to US dollar was about 2 Yuan for one dollar, although US dollar was un-accessible to people. So that’s 7 US cents per half kilogram of cane sugar. You pay the same price 10 years ago or 10 years later. It was fixed.

Bus rides costed 2 cents (Yuan) per stop at that time. Going from point A to point B costs 1 dime if there was 5 stops. Each stop is approximately half a mile between each other. And it was also fixed for a long long time. Today, it’s more likely one Yuan per ride, regardless of the number of stops.

Ice cones that vendors sold on streets in the summer costed 3 cents each. Incredible, right. Same thing costs about a few dollars per box of 6 or 12 hear in America. I really missed the era when ice cones were 3 cents. You could buy 200 or 300 of them with just one dollar, using today’s conversion rate and the price 20 years ago :-)

Quantoken

JC said:
“A more accurate “value” of a currency, is what it is fetching on the black market. The government can always cheat in their “official” exchange rates. Government decreed “fixed prices” rarely ever reflect the true free market prices.

With the Chinese Yaun pegged to the American dollar at an official rate of around 8.3 Yuans to one American dollar, the black market rate was easily 10 Yuans to one American dollar, or sometimes even more, during the 1990’s. At least this is what many Chinese expatriates have mentioned over to me the years.”

Not true. It’s exactly the opposite. It did happen that the black market value of dollar was higher than the official rate. But it is clearly not a true value because it was NOT a free market value.

I say it again: BLACK market is NOT the FREE market. It’s the opposite. Once you have a free market, the black market disappears. When you do NOT have a free market, that’s when the black market shows up. And it was clearly due to government control.

Think about it, if you have dollars, you can go to a bank and convert it to RMB. But you can NOT do the same and go to bank and convert RMB to US dollars. Basically the government shuts off all access to US dollars. For most people the only way to acquire dollars was through black market. It’s a supply and demand thing and that’s why US dollar was valued higher in the black market.

Certainly things are very very different in China nowadays. It is still hard to acquire US dollars from banks, but not that hard any more if you have legitimate reasons and if the amount is a small quantity. And the black market is all but gone now.

Quantoken

It’s the sad inheritance of our ancestors.
My grandfather take part in WWII for USSR. His stories are really scary.