In my initial post last May I mentioned I would discuss some of the economic environments that I have worked in as part of my consulting work. I have some very clear memories about inflation in the US from the late 1970s and early 1980s. I worked in a grocery store from 1979 to 1980 in suburban Chicago and one of my duties was to change prices on the full range of grocery products. This was before the time of electronic bar codes that allowed price changes to happen essentially automatically. Back then you had to either scrape the price tags off cans and put the new price tag on, or for products in boxes the old price tags had to be covered up with the new, higher price tag. Also as a business student in the early 1980s I remember that we took up quite a bit of time on inflation accounting, learning how to detail financial statement footnotes regarding the underlying cost basis. I don’t recall ever using that concept in practice once I started working full-time in the mid-1980s.
In one of my trips late last year, I spent some time working in Belarus in November. One interesting characteristic that I found about the Belarusian economy is that inflation is currently hovering around 100 percent. The currency experienced two major devaluations during 2011. Last spring the USD/BYR exchange rate stood at about 3,000:1. One devaluation occurred in May that sent the rate to about 5,000:1 and another devaluation in September and October sent the rate to just under 9,000:1 which is about where it stood when I was there. It has recently drifted back to about 8,300:1. Usually when I travel to a country I immediately exchange a few hundred dollars into the local currency. I didn’t do that in Belarus. I exchanged about $40 of spending money every two or three days and I got a few thousand BYR more each time I went to exchange currency. Some cite loose credit in the form of “issuing cheap loans to cover state firms’ budget gaps and propping up the ruble at what eventually became more than double its actual worth” as the cause of the problems with the economy. Most of the lending in Belarus is undertaken by large state-owned banks.
One final anecdote will close out my post. I have been to three countries where I have seen Lenin statues previously—Tajikistan, Ukraine and now Belarus. In Tajikistan and Ukraine, the statues were tucked away in parks. In Belarus, the statue is in front of the Government.