I checked out Zerohedge today, as I tend to do at least once a day, and saw the news that Belarus had a sudden 30% collapse in its currency, the Belarusian Ruble. For those who don’t know Zerohedge, it’s a good resource, but don’t take it too seriously. According to Tyler Durden, the sky falls every day. It will at some point, but we’ll all see it when it starts, and we won’t need Zerohedge to tell us it’s happening.
When the dollar falls 10% in a day, we’ll know we’re there.
Anyway, I don’t usually read full Zerohedge articles, just the snippets on the homepage to get a feel for what’s going on in wacky world of Keynesian finance. Anything especially interesting I double check at RT, which is sort of like a toned-down Zerohedge, libertarian-leaning news outlet that is favorable to Putin. I found at RT the reason for the sudden 30% drop in the Belarusian Ruble.
The national currency lost 30 percent of its value shortly after the country’s national bank introduced a 30 percent tax for individuals and businesses purchasing foreign currency. The Belarusian ruble reached 14,150 against the US dollar, and 17,400 against the euro, with the net cost of $1 amounting to 11,000 Belarusian rubles, and €1 to 14,000.
It’s really beyond words how stupid central banks are. In order to protect its currency, the central bank of Belarus instituted a 30% tax on people who want to sell it. This, they thought, would prevent people from selling the currency and stabilize its exchange rate.
Instead, what happened is that all the demand to sell the Belarusian Ruble for foreign currency translated itself into a demand to sell the Belarusian Ruble for any physical asset anybody could get their hands on in Belarus.
You can’t legislate prices. Not wages, not exchange rates, not anything.