Post by The Great Aztec Joe on Nov 24, 2011 8:01:53 GMT -8
Socialism (Communism) that supports a massive welfare state with freeloaders everywhere on the dole has to have a massive Balance of Trade Surplus for its currency to hold value.
Without that production for export, the country becomes a debtor to other countries and its currency inflates and inflates and inflates.
Witness communist Russia:
By 1922, the Russian Ruble underwent a number of denomination changes, putting the exchange rate at one new Ruble being equal to 10,000 of the old Rubles. A third change occurred in 1923, which changed the exchange rate so the new Ruble was equal to 100 of the old Rubles however, only paper money was being issued during this time. The fourth change to the gold Ruble happened in 1924, changing the value again at one new Ruble equaling 50,000 old Rubles.
Then the Russian Ruble did not change again until 1947 after WWII. At that time, the Soviet government cut down the amount of money being circulated, which really only affected paper money but the old Rubles also changed in value, now being one-tenth that of the face value.
In 1961, another change would occur for the Russian Ruble when a redenomination reform was ordered yet again but this time, by changing the amount of gold used to mint the coins. Unfortunately, hyperinflation was a serious problem during the early part of the 1990s, which further dramatically devalued the Russian Ruble.
The seventh change to the Russian Ruble came about in 1998, at which time the exchange rate equaled one new Ruble to 1,000 old Rubles. However, while the goal was to help stabilize the economy, the underlying problems were not corrected, leading to the 1998 Russian financial crisis. In fact, within six months following this horrific crisis, the Russian Ruble was 70% less its value to the US Dollar.
Without that production for export, the country becomes a debtor to other countries and its currency inflates and inflates and inflates.
Witness communist Russia:
By 1922, the Russian Ruble underwent a number of denomination changes, putting the exchange rate at one new Ruble being equal to 10,000 of the old Rubles. A third change occurred in 1923, which changed the exchange rate so the new Ruble was equal to 100 of the old Rubles however, only paper money was being issued during this time. The fourth change to the gold Ruble happened in 1924, changing the value again at one new Ruble equaling 50,000 old Rubles.
Then the Russian Ruble did not change again until 1947 after WWII. At that time, the Soviet government cut down the amount of money being circulated, which really only affected paper money but the old Rubles also changed in value, now being one-tenth that of the face value.
In 1961, another change would occur for the Russian Ruble when a redenomination reform was ordered yet again but this time, by changing the amount of gold used to mint the coins. Unfortunately, hyperinflation was a serious problem during the early part of the 1990s, which further dramatically devalued the Russian Ruble.
The seventh change to the Russian Ruble came about in 1998, at which time the exchange rate equaled one new Ruble to 1,000 old Rubles. However, while the goal was to help stabilize the economy, the underlying problems were not corrected, leading to the 1998 Russian financial crisis. In fact, within six months following this horrific crisis, the Russian Ruble was 70% less its value to the US Dollar.