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say a country was an exporting country heavily reliant on a physical good like cotton, but the cotton industry was under state control. Given this country is going through hyperinflation (partly due to govts fiscal uncertainty causing people to exchange currency for dollars) and the prices of global cotton are currently low, would privatising cotton industry then reduce hyperinflation since prospects for workers improve as more chance of employment, and it would be a sign of govt improving fiscal position and more could believe govt has ability to pay off debts, so more ppl hold onto currency, improving its value and therefore reducing hyperinfaltion.
Also is it possible if you privatise to make your currency a required one for oil exports from your country?
Also is it possible if you privatise to make your currency a required one for oil exports from your country?
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That's a very long sentence...
The privatisation of state enterprise is unlikely to cure hyperinflation by itself. In the majority (if not all) of historical cases, hyperinflation came about from the printing of money and the over-expansion of the money supply. Whilst in theory you can flood the economy with goods, that intuitively sounds impossible. Even though the private sector tends to be more productive, a firm or multiple firms aren't going to increase output to the extent where the 'amount' of goods in the economy corresponds with the money supply.
You will likely need to abandon the old currency and either introduce a new one (Weimar Germany) or adopt someone else's (Ecuador and USD).
Regarding the second question, if you want to buy something from a country you need to pay them in their currency, or at least a currency they are happy to accept like the dollar. Privatisation is not particularly relevant.
The privatisation of state enterprise is unlikely to cure hyperinflation by itself. In the majority (if not all) of historical cases, hyperinflation came about from the printing of money and the over-expansion of the money supply. Whilst in theory you can flood the economy with goods, that intuitively sounds impossible. Even though the private sector tends to be more productive, a firm or multiple firms aren't going to increase output to the extent where the 'amount' of goods in the economy corresponds with the money supply.
You will likely need to abandon the old currency and either introduce a new one (Weimar Germany) or adopt someone else's (Ecuador and USD).
Regarding the second question, if you want to buy something from a country you need to pay them in their currency, or at least a currency they are happy to accept like the dollar. Privatisation is not particularly relevant.
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(Original post by BasicMistake)
That's a very long sentence...
The privatisation of state enterprise is unlikely to cure hyperinflation by itself. In the majority (if not all) of historical cases, hyperinflation came about from the printing of money and the over-expansion of the money supply. Whilst in theory you can flood the economy with goods, that intuitively sounds impossible. Even though the private sector tends to be more productive, a firm or multiple firms aren't going to increase output to the extent where the 'amount' of goods in the economy corresponds with the money supply.
You will likely need to abandon the old currency and either introduce a new one (Weimar Germany) or adopt someone else's (Ecuador and USD).
Regarding the second question, if you want to buy something from a country you need to pay them in their currency, or at least a currency they are happy to accept like the dollar. Privatisation is not particularly relevant.
That's a very long sentence...
The privatisation of state enterprise is unlikely to cure hyperinflation by itself. In the majority (if not all) of historical cases, hyperinflation came about from the printing of money and the over-expansion of the money supply. Whilst in theory you can flood the economy with goods, that intuitively sounds impossible. Even though the private sector tends to be more productive, a firm or multiple firms aren't going to increase output to the extent where the 'amount' of goods in the economy corresponds with the money supply.
You will likely need to abandon the old currency and either introduce a new one (Weimar Germany) or adopt someone else's (Ecuador and USD).
Regarding the second question, if you want to buy something from a country you need to pay them in their currency, or at least a currency they are happy to accept like the dollar. Privatisation is not particularly relevant.
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