
Old bills in Yemen are worth 10% more than new ones - ubac
http://jpkoning.blogspot.com/2020/05/one-country-two-monetary-systems.html
======
cesarb
> In the west, we take fungibility for granted. [...] The fact that a dollar
> is worth the same in Los Angeles as it is in New York, or Vancouver as it is
> in Halifax, is worth celebrating.

I've experienced the opposite here in Brazil: someone who had leftover US
dollar banknotes from a trip to Disney in the 90s decided to exchange them
back to the Brazilian currency. Since they were old banknotes, the bank would
only exchange them at a heavy discount (I don't recall how much, but it was at
least 10%); if they were new banknotes, there would be no discount. So here we
have the opposite of the situation in this article: new US dollar banknotes
are worth more than old USD banknotes (this is not an isolated case, a quick
web search shows that often old US dollar bank notes aren't even accepted for
exchange).

~~~
sandworm101
The US has worked to prevent this. I remember as a kid in the middle east (a
time/place where everything was in cash) seeing commercials from the US that
said, in effect: "We are printing new 100$ bills. The old ones will be good
_forever_. Don't fall for scams selling new bills for old."

Even at the time I thought those commercials came from a good place. Being a
world currency sometimes going the extra mile to protect not just its value or
exchange rate, but the reputation of its physical manifestation.

~~~
londons_explore
Compare that to England where a note or coin can be discontinued with just 6
months notice.

Sure, they say you can still convert the old notes to new, but only in small
quantities, and only with ID and proof of where the notes came from.

~~~
nunb
Back when the sterling actually meant something this could never happen. The
world’s reserve currency must never be questionable. But WW2 broke England’s
back, although they were only called on it by Soros much later.

------
reidacdc
There are fungibility surprises in the west, also.

In the UK, one sometimes runs across banknotes issued by banks in Scotland,
which generally circulate like those issued by the Bank of England, but have
some technical differences.

Many years ago, I had a cab driver in London who very adamantly refused to
take a Scottish pound note by way of fare payment, and as I later learned, was
well within his rights to do so.

It's sort of the inverse of the situation described in the article -- Scottish
and Bank of England notes are technically not fungible, but are mostly treated
as if they are, with a few exceptions, whereas the article describes notes
that technically are fungible, but are treated as if they are not.

~~~
sleepychu
Scot here, I mostly don't have problems with this in cities. Wouldn't have
expected to find this in London (although generally I get some cash out in
England once I'm there).

My mum and dad's home town though, whole different ball game. The bank charges
extra to businesses to take the notes into their account but will happily
exchange them gratis for individuals so none of the shops will take them.

------
redis_mlc
Some currency factoids:

1) North Korea has nearly perfect USD$100 printing plates, and finances
imports with them. There have been several news articles written about this.

2) In Indonesia, the USD is a parallel currency that individuals/business
owners use as a hedge against instability. Typically they'll have a hardbound
book with mint USD$100 bills between alternating pages.

By mint I mean no holes, no wear, no ink stamps, post 2000.

3) I met somebody who had saved $15,000.00 in Indonesian Rupiah towards UK
accounting school. Sadly, the month before, the Rupiah was devalued by 90% and
he was left with only $1,500. See #2.

Typically when you exchange USD$2,000.00 there, you get a brown lunch bag full
of Rupiah note bundles. You almost need a duffel bag to do a large exchange or
withdrawal.

4) The lowest amount, the 100 Rupiah note, worth less than 1 cent, has an
orangutan on it. Coincidentally, the strongman Suharto was on the old 50,000
note, worth about $3, the highest amount at the time. Guess which one is
called the monkey note? :)

~~~
boomboomsubban
>North Korea has nearly perfect USD$100 printing plates, and finances imports
with them. There have been several news articles written about this

I believe there has only been one report of a "superdollar" found since 2008,
and there has never been overly strong proof that North Korea were the ones
producing them

~~~
pas
If it's perfect, how would anyone find them?

~~~
Leherenn
Serial numbers I assume?

~~~
pas
What do you mean? You would need to track every bill and simultaneously find
two matching ones, and now you know one of them is a counterfeit but which
one?

~~~
Leherenn
You don't really need to know which one is which (and if the counterfeit one
is perfect, does it even matter?).

But if you have 2 bills with the same SN, then you know someone is creating
perfect counterfeited bills.

------
ubac
"The rebels were not happy with the new notes. It's easy to guess why. Fresh
money could be used to pay government fighters, not rebel fighters. This
"blood money" would then cheekily flow north via trade. Since anyone who holds
a banknote is by definition funding the government that issues it with a no-
interest loan, the rebel north was financing its own enemies. (The technical
term for this sort of financing is seigniorage)."

~~~
adtac
Is it really a no-interest loan? Or is it a negative interest loan? The value
of the bank notes the government gave you, presumably by printing it, is less
than it was than a few moments ago by the sheer presence of more of it. And
it's probably safe to assume that they'll print even more, furthering
decreasing your payment's value.

~~~
lopmotr
If you measure interest in the currency you're lending, like everyone else
does, then it's exactly 0% interest. Interest rates advertised by banks aren't
adjusted for inflation either.

------
pjc50
Fascinating. I believe there was a similar demonetization when the IRA stole a
large fraction of banknotes issued by Northern Bank in 2005:
[https://en.m.wikipedia.org/wiki/Northern_Bank_robbery](https://en.m.wikipedia.org/wiki/Northern_Bank_robbery)

The UK is quite unusual in retaining private note issue for banks in the
different union nations.

~~~
vinay427
This was common practice on a smaller scale for the IRA (Provisional IRA,
etc.) throughout the Troubles from what I understand, though the heist you're
referring to is particularly notable due to its magnitude and later timing. It
evidently proved to be a relatively easy way to raise money, especially as it
was at the loss of their purported enemy.

------
supernova87a
Another interesting story is that of the US dollar bills that were overprinted
with "HAWAII" during WW2. It was to protect against Japan invading and seizing
currency, so it was marked for such an eventuality.

[https://www.futilitycloset.com/2015/08/21/hawaii-
overprint-n...](https://www.futilitycloset.com/2015/08/21/hawaii-overprint-
notes/)
[https://en.wikipedia.org/wiki/Hawaii_overprint_note](https://en.wikipedia.org/wiki/Hawaii_overprint_note)
[https://gizmodo.com/the-us-issued-special-banknotes-in-
case-...](https://gizmodo.com/the-us-issued-special-banknotes-in-case-japan-
invaded-h-1736274265)

------
gst
> So by late 2016 we've got two different branches of the central bank, one
> controlled by the rebels and the other by the internationally-recognized
> government.

This sounds a lot like the Bitcoin vs. Bitcoin Cash hardfork. The pre-fork
UTXOs were recognized by both parties, while post-fork UTXOs are only
recognized on one side of the fork.

------
DC-3
This blog is fantastic. I really enjoyed reading the linked articles within
this piece about the Somalian currency.

------
jeffrallen
Differing values for the same currency surprised me in Liberia too:
[https://blog.nella.org/my-favorite-things-all-at-
once/](https://blog.nella.org/my-favorite-things-all-at-once/)

------
lonelappde
The country had a civil war and the money printing system was split into two.
The two enemies don't trust each other's fiat money.

~~~
ronyfadel
You’re forgetting what was mentioned in the article: one of the 2 enemies
can’t/isn’t printing money at the moment, and is sitting on a deflationary
currency.

------
gumby
An interesting example of the opposite is the Lebanese pound: the central bank
somehow managed not only to keep operating but to maintain the strength
(stabilize the exchange rate) of the currency through the civil war. I believe
the head of the central bank moved into the bank and didn't leave for years.

~~~
ronyfadel
Here’s the more correct version:

Before and during the war, up until the late 80’s, 1 USD was worth 3 Lebanese
pounds (LBP).

In the late 80’s (war ended in 90-91) the USD reached well over 1000 LBP, and
reached 2500 LBP in 1992.

In 1997, the LBP was pegged to the dollar at 1 USD = 1507 LBP.

Fast forward to 2020, where the banking system has started showing cracks, and
there are 3 exchange rates at the moment:

\- Official rate: 1 USD = 1507 LBP \- Banks’ rate: 1 USD = 3000 LBP \-
Exchanger’s rate: 1 USD = 4200 LBP (changes daily)

~~~
sulZ
Forgive my naivety, but doesn't that mean there's an arbitrage opportunity?

------
ebg13
> _In the west, we take fungibility for granted. The fact that a dollar is
> worth the same in Los Angeles as it is in New York, or Vancouver as it is in
> Halifax, is worth celebrating._

Except that this is both blatantly false and also not at all analogous. First,
a currency's "worth" is expressible solely in terms of what you can buy with
it, and the price in dollars of a McDonalds Quarter Pounder is absolutely not
the same in different locations. And second, the Yemeni city isn't the
important distinction between the different Yemeni bills; the minting
authority is.

A comparison between French Euros and Spanish Euros would have been far more
reasonable, as they're produced by separate minting authorities but still both
Euros.

~~~
mumblemumble
One could argue that it's not that the value of a dollar varies by location,
but that the value of a quarter pounder varies by location. And I think that
might be a more practical perspective, since a variable-value dollar would
present an easy arbitrage opportunity, whereas buying quarter pounders in
Manhattan and reselling them in Peoria is a scheme that would run afoul of
some technical challenges.

I think that I like the way that the World Bank measures the value of the two
rials better. The US dollar (or any other large stable foreign currency)
theoretically represents a fairly stable measuring stick that's going to be a
little bit more resilient to regional effects than a commodity good.

~~~
thaumasiotes
> One could argue that it's not that the value of a dollar varies by location,
> but that the value of a quarter pounder varies by location. And I think that
> might be a more practical perspective, since a variable-value dollar would
> present an easy arbitrage opportunity, whereas buying quarter pounders in
> Manhattan and reselling them in Peoria is a scheme that would run afoul of
> some technical challenges.

You could make that argument, but it wouldn't be a very good argument, since
the value of _everything_ is systematically higher (measured in dollars) in
Manhattan than in Peoria. The obvious model is that the value of the dollar is
lower in Manhattan. (Also, you seem to have mixed up where you would be buying
the hamburgers and where you'd be selling them.)

~~~
leetcrew
this might seem obvious, but it doesn't really describe the situation well.
things are expensive in manhattan because it is expensive to live in/around
manhattan. even the lowly mcdonalds employee gets paid about twice as much to
work in manhattan as in peoria. if you buy something that doesn't require
local storage/labor, it will cost the same as it does in the rest of the
country.

~~~
thaumasiotes
> things are expensive in manhattan because it is expensive to live in/around
> manhattan. even the lowly mcdonalds employee gets paid about twice as much
> to work in manhattan as in peoria.

All of this _supports_ the idea that the value of a dollar is lower in
Manhattan than elsewhere. Indeed, it doesn't just support the idea; it is a
restatement of it.

~~~
leetcrew
only if you ignore _why_ it's more expensive to live in NYC. it's more
expensive because it's more desirable to live in NYC than Peoria. waterfront
property is also more expensive than similar inland properties. the water
doesn't locally inflate the dollar; it's a feature that people pay extra for.

if you accept that the real value of a dollar is less in NYC, you also have to
accept weird consequences like a CPU from amazon is worth less there as well.

~~~
ebg13
> _waterfront property is also more expensive than similar inland properties._

That explains _property_, not McDonalds Quarter Pounders which are exactly the
same everywhere.

~~~
leetcrew
it's another example of the same phenomenon. a mcdonald's quarter pounder is
not the same everywhere. the sandwich itself is the same, but the location is
an important (and sometimes expensive) part of the whole package. how much
would you pay for a big mac that happens to be located a hundred miles away
from you?

~~~
ebg13
> _how much would you pay for a big mac that happens to be located a hundred
> miles away from you?_

You just showed that proximity to the buyer matters, not location, because
_delivery_ is an additional cost in both money and time. If you want an apt
comparison, you need to not bundle unrelated expenses. Whichever McDonalds I'm
at, proximity to me is the same at time of purchasing identical Quarter
Pounders, and the price is not.

~~~
leetcrew
we seem to be talking past each other, but I'm curious to see exactly where
our positions diverge.

I think you already agreed that waterfront property is more valuable in real
terms than a similar inland property because being close to the water is a
desirable feature to some people.

do you also agree that a retail space in NYC is more valuable than a similar
space in peoria, in the same real sense, with the vast social and business
network of NYC being the value add?

if you agree that the real value of property in NYC is higher (due to
proximity to lots of other desirable stuff), then you should agree that it
makes sense that property commands a higher rent here. because the rent is
higher, so too is the cost of labor and storage. if you follow the chain of
reasoning thus far, you should agree that the real value of a quarter pounder
in NYC is simply higher due to the higher input costs.

I don't think there is an absolute "correct" answer here. we are arguing for
competing models, and a model is only good insofar as it explains/predicts
reality. if I squint hard enough, I can see why yours might make sense. but it
seems to raise a lot more questions than answers. if a dollar in NYC is truly
worth less than a dollar in peoria, why is this only reflected in the price of
local goods and services (ie, stuff where local rent is a major input)? why
does stuff from amazon have the same nominal cost everywhere in the US? it
seems much simpler to just accept that NYC property has a higher real value
and let everything else follow from that.

~~~
ebg13
> _you should agree that the real value of a quarter pounder in NYC is simply
> higher_

The real value of the quarter pounder is the same, because the quarter
pounders are identical. The real cost is higher because each dollar buys less.
The properties' real values are not the same, because the properties are not
identical.

> _the real value of a quarter pounder in NYC is simply higher due to the
> higher input costs_

Cost is not value. Cost doesn't even create or drive value. Cost is the
counterpoint to value in a trade equation. This holds true for both production
and consumption.

Consumption side: Given two identical products at two different merchants with
two different prices, I will choose the cheaper one, NOT because one of the
identical products has greater value, but because the difference between the
product's value and its price is greater, which means that I get to keep some
of the money.

Production side: If the value of a thing is not more than it costs me to make,
I will not spend resources to make that thing (unless I'm Softbank, har har).

Here are two thought experiments:

1\. Say that NYC imposes a 500% sales tax on fast food tomorrow. Has the value
of a Quarter Pounder gone up, or will McDonalds just close their NYC locations
because nobody wants to pay that much for fast food?

2\. Say I buy Quarter Pounder ingredients at some point equidistant from NYC
and Buffalo, and then I teleport myself and the ingredients to NYC/Buffalo,
and then I assemble the Quarter Pounder in NYC/Buffalo and eat it there. I am
enriched (I assume) equally by the same ingredients composed into the same
delicious (I assume) product. So what is different about the two scenarios? If
I want to buy more, my dollars don't buy as much in the two places. But I have
not changed, the Quarter Pounders have not changed, the ingredients have not
changed, the labor has not changed, the storage has not changed. Those are all
still identical to the ones I brought in. The difference is my dollars.

------
borumpilot
Anacdotal:

Late 80's (cant pinpoint the exact year) I spend some time on the Sinai
Peninsula and the local Bedouin would not accept freshly printed Egyptian
Dollars but only the old ones. They figured we had be Israeli who printed our
own money and tried to rip them off.

We had to exchange (read: pay a 10% fee) the new bills with old bills from
taxi drivers.

------
snug
This is awesome, offtopic would be good to read more about Cubas dual currency
system (Pesos vs Convertible Pesos). Why it was started, as well as what
merchants will take, for example they would take my USD in place of the same
number of CUCs

------
riffic
Why doesn't blogspot automatically redirect http URLs into https ones?

~~~
bakztfutur3
This is the most HN comment ever.

~~~
cwmma
honestly the more HN comment is somebody complaining that it does redirect
http to https because <long rant about certificate issuers> and then somebody
brings up lets encrypt and then it degrades into a big argument until
eventually somebody brings up SWJs at which point that person lost the
argument.

~~~
jhhh
Maybe the second most HN comment is running argument simulations? This one is
even complete with a base case (SJWs) that is self-ending because you yourself
brought it up. Saved us the trouble.

~~~
perl4ever
No, they said SWJ, the journal dedicated to intrastate conflicts.[1] Not to be
confused with the WSJ.

[1][https://smallwarsjournal.com/](https://smallwarsjournal.com/)

