Brazil has faced hyperinflation in the past.
Twenty years ago, Brazil found itself in the grips of hyperinflation. Its inflation rate hit 80% a month, and the country was in financial free fall.
Economists at the Catholic University in Rio came up with an unlikely – but ultimately successful – plan to rescue the country. And would you believe it, the plan calls for fake money..
The four friends set about explaining their idea. You have to slow down the creation of money, they explained. But, just as important, you have to stabilize people’s faith in money itself. People have to be tricked into thinking money will hold its value.
The four economists wanted to create a new currency that was stable, dependable and trustworthy. The only catch: This currency would not be real. No coins, no bills. It was fake.
“We called it a Unit of Real Value — URV,” Bacha says. “It was virtual; it didn’t exist in fact.”
Read the fascinating story over at NPR’s Planet Money blog: Link
– via Just Urbanism