January 1, 2005

DROP 6 ZEROES:


Turkish Currency Is One in a Million
: With hyperinflation in its past and membership in the European Union a goal for the future, the nation makes its money more manageable. (Tracy Wilkinson, January 1, 2005, LA Times)

Starting today, Turks will no longer have to shell out millions to buy a stick of chewing gum. Tourists will no longer have to squint at the bills they receive, trying to count the zeros that fill a price tag or a piece of money.

Turkey is launching a new currency, the New Turkish Lira, or YTL, that drops six zeros, makes the money more manageable and, the government hopes, gives a psychological boost to citizens, business owners and investors.

One million liras abruptly becomes 1 lira, about 65 cents. A 20-million lira bill — until now the country's largest denomination — becomes 20 lira, or roughly $13.

"With the YTL, our currency's longing for prestige is coming to an end," Turkish Prime Minister Recep Tayyip Erdogan said at ceremony to unveil the new banknotes.

Turkish officials see the new currency as another crucial step in Turkey's quest for membership in the European Union and the wider Western world.

It has been difficult to take the currency seriously. Where else do you spend 4 million for a coffee? And the poorest Turk can easily be a millionaire, earning a pittance by begging, picking up trash or selling nuts on the street. A pittance of millions.

"This will be a good thing," said Tahir Eginci, who sells hand-painted ceramics in Istanbul's Grand Bazaar. "So many zeros, it scares customers. They ask a lot of questions and are very nervous."


It's got a better future than the euro.

Posted by Orrin Judd at January 1, 2005 9:30 AM
Comments

Which in turn has a better future than the US$.

Posted by: creeper at January 1, 2005 10:39 AM

You moving?

Posted by: oj at January 1, 2005 10:43 AM

Which of course is why pretty much everybody in Turkey keeps their cash in dollar denominated accounts.

Posted by: Bart at January 1, 2005 12:46 PM

I remember visting right after Brazil did the same thing around 1969, lopping off three zeros. All the thousand cruzeiro bills had a gray circular rubber stamp on them, marking them as "Un Novo Cruzero" (or something like that) instead. And it was still worth only a few cents US, and they've had to do it a few more times since, including a renaming or two.

Posted by: Raoul Ortega at January 1, 2005 3:44 PM

"You moving?"

To where?

Posted by: creeper at January 2, 2005 3:27 PM

exactly.

Posted by: oj at January 2, 2005 3:38 PM

Not sure what your point is. I already live in Europe.

Posted by: creeper at January 3, 2005 4:59 AM

Ah, a continent on the rise, eh?

Posted by: oj at January 3, 2005 8:07 AM

On the rise? Ireland certainly is.

You took a dig at European currency in your post. The Euro has gained somewhat more than 40% in value against the old greenback in the last 2-3 years. Some would define that as a 'rise'.

Posted by: creeper at January 3, 2005 5:16 PM

creeper:

Currency values? Not anyone who has a clue.

Posted by: oj at January 3, 2005 5:26 PM

In your post you set out to judge the future of a currency, but for some reason you think the values of currencies are not determined by "anyone who has a clue".

So what is the point of talking about the future of the Euro? If it goes up, it's because nobody has a clue; if it goes down, it's because nobody has a clue.

Posted by: creeper at January 3, 2005 5:36 PM

I wasn't talking about currency.

Posted by: oj at January 3, 2005 5:44 PM

Fine. So what were you talking about? I had to guess a little at what you were getting at with "Currency values? Not anyone who has a clue."; a verb would have been helpful.

Okay, now you say you weren't talking about currency. Perhaps I came to that conclusion a little too hastily when you were talking about the future of the Euro (which is a currency) or the level of clued-in-ness of "anyone" who stands in some undefined relationship to the concept of "currency values" (which appears to be related to the concept of currency).

I could see how you could say you weren't talking about currency in your little dig here: "Ah, a continent on the rise, eh?"

Is Europe on the rise? In some ways, maybe. It's consolidating its strength, but it sure has a long way to go. Demographics are not helping, as Europe has an ageing population.

The US is strong economically as well, stronger than Europe, but in relation to China and India, which are very much on the rise, both Western Europe and the US will level off and perhaps even decline slightly, but probably not disastrously.

Posted by: creeper at January 3, 2005 6:00 PM

If you believe in the market determining the value of things, shouldn't you conclude from the trend and current rates that money is better held in European currency than American currency?

Posted by: creeper at January 3, 2005 6:09 PM

The market doesn't determine--Central banks do.

Posted by: oj at January 3, 2005 6:14 PM

Central banks as well as the market - or is George Soros a central bank?

Posted by: creeper at January 3, 2005 6:57 PM

He's as powerful as most central banks when he decides to warp market forces to his own end.

Posted by: oj at January 3, 2005 7:05 PM

"warp market forces to his own end"

So now you're saying that there are market forces that influence the value of currencies.

Posted by: creeper at January 3, 2005 11:15 PM

Not if someone manipulates the market.

Posted by: oj at January 3, 2005 11:23 PM

So as soon as someone manipulates the system, market forces have no influence at all?

Posted by: creeper at January 3, 2005 11:26 PM

it's not a market--it's a scam.

Posted by: oj at January 3, 2005 11:30 PM

(a) so are there market forces or aren't there?

(b) if it's a scam, it's a scam from which the US also benefits.

(c) if you have excess cash, you're free to keep it in any currency you choose.

Posted by: creeper at January 3, 2005 11:45 PM

(1) There are always market forces, even when there isn't a market.

(2) Yes, it only benefits America economically and Europe emotionally, providing the illusion that the continent still matters.

(3) No American owns anything but dollars and gold.

Posted by: oj at January 3, 2005 11:54 PM

(1) There are always market forces, even when there isn't a market.

Example?

(2) Yes, it only benefits America economically and Europe emotionally, providing the illusion that the continent still matters.

So now you claim that the current rate of the Euro is just the result of a big scam intended to make Europeans feel better? Currency speculators and central banks cast aside any notions of self-interest in order to provide Europeans an emotional lift? Buying into the Euro out of pity?

Europe remains the world's second largest economy; the fact that it matters is hardly an "illusion".

(3) No American owns anything but dollars and gold.

He is free to choose this, or to choose to own any other currency as well. There's a free market out there in which he can participate.

Posted by: creeper at January 4, 2005 12:47 AM

(1) Even though Bill Gates has warped the market for software until it is not free by any definition of the word, he ultimately can't withstand the demand for better product. same thing happened to Bell Telephone and the Big 3 automakers. When George Soros cornered currency markets there were still buyers who weren't aware the fix was in--they brought market forces with them.

(2) Yes, precisely. They've imposed even slower growth than a dying society needed in order to inflate the currency for psychological reasons.

(3) Yes?

Posted by: oj at January 4, 2005 12:53 AM

(1) Even though Bill Gates has warped the market for software until it is not free by any definition of the word, he ultimately can't withstand the demand for better product. same thing happened to Bell Telephone and the Big 3 automakers. When George Soros cornered currency markets there were still buyers who weren't aware the fix was in--they brought market forces with them.

Those are examples of market forces working within markets, not examples of your statement: "There are always market forces, even when there isn't a market."

Even when competition is artificially kept alive, it is still an essential ingredient of a market.

Posted by: creeper at January 4, 2005 1:01 AM

You go try and compete with Bill Gates.

Posted by: oj at January 4, 2005 1:05 AM

The fact that one can try to compete with Bill Gates is what makes it a market. Because he is a strong competitor does not mean the market doesn't exist, as he himself discovers from time to time.

Posted by: creeper at January 4, 2005 1:37 AM

The fact that he'll use criminal business portactices to destroy you makes it not a market, though market forces exist within it.

Posted by: oj at January 4, 2005 7:45 AM

A highway remains a highway regardless of whether people break the speed limit on it.

Posted by: creeper at January 4, 2005 7:57 AM

Yes, but a race isn't a race if your opponent sabatoged your car.

Posted by: oj at January 4, 2005 8:22 AM

Sure it is. It's just not a fair race, that's all.

That's why we have regulatory bodies and the law; that's why Bill Gates has to defend his behavior in court.

Posted by: creeper at January 4, 2005 9:00 AM

"The fact that he'll use criminal business portactices to destroy you makes it not a market, though market forces exist within it."

It being what, if not a market?

Posted by: creeper at January 4, 2005 9:05 AM

Yes and a fixed market isn't a free market, which is what "market" means in economic terms.

Posted by: oj at January 4, 2005 9:07 AM

A free market with a few miscreants kept in check by the law is still a free market, not a fixed market.

Posted by: creeper at January 4, 2005 9:38 AM
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