Sunday, March 23, 2008

Decline and fall of the almighty Dollar

A long time ago, on another planet, there was an almost hypothetical country called Israel. Israel was a Jewish country. Naturarlly, people there made their living from the air business, or as the Yiddish writer Shalom Aleichem called it, Luftgescheft
Each year, the economic wizards of the world predicted that this state would inevitably be bankrupt in a year. The finance ministers of this country juggled numbers and books and currency. There was one dollar for buying imported goods, and another one for selling them, and a third, black market one, for spending abroad and buying things you were not supposed to buy. Israeli Milo Minderbinders made money by buying detergent in Germany for 4 cents, shipping it to Israel, and then selling it back to Germany for 2 cents, making a 2 cent profit with the government export subsidy. The exchange rate of the black market dollar, along with the going rate for sex services, was published in the newspapers.
The main financial instrument of this state was the printing press, and the major economic policy was devaluation. My great uncle, who lived in this hypothetical state, went to sleep a millionaire and woke up a pauper. He was not alone. It happened more than once.
Every few months, the finance minister would make some nonsensical pronouncement, approximately like this, "We have been anxiously watching the unrest in South America and Africa,  the decline of the Japanese Yen and the fluctuations of the price of hay in China, which require realignment of national economic policy. Therefore, and in accordance with the above, the government has decided to devalue Israeli currency by 10%." The announcement was always made just before the Sabbath, when the banks had closed.
Eventually, the slide in the value of Israeli currency was so precipitious that announcements like the above became superfluous. Who can keep track of all the changes? The Lira became the Shekel. The Shekel became the New Israeli Shekel, and then it became the Newer Israeli Shekel. Each time, zeros were lopped off the exchange rate to ensure that calculators, computers and supermarket stickers would not be overloaded. At one point, salaries were devalued by twenty percent from the time they were paid until the time you could collect them. Confronted with a price in Shkalim, or Lira or New Israeli Shekels, tourists and new immigrants inevitably asked, "How much is that in real money?"
Inflation was a fact of life. The second summer I lived in Jerusalem, I waited in vain for the price of bananas to go down to 75 agorot again, as they had the year before when bananas were in season. That's how much I knew. Bananas were IL 1.50 in the second summer, and that was as cheap as they would ever get. This 100% rise in prices of just about everything was somehow translated into a 5 percent annual rise in the cost of living index.
To maintain some semblance of economic sanity, every price was tied to the dollar. Salaries, rents, prices of automobiles, prices of apartments and land, all were expressed in dollars. The idea of adopting the dollar as currency was considered seriously. It was called "Dollarizatsia."
Times changed. Today everyone thinks that "Luftgescheft" has to do either with the Luftgescheft Royal Bank software program (there is such a thing) or with the Israel Aircraft Industry, which acquired the name unofficially long ago. Every day we watch the little red arrows on the television screen next to the exchange rates of the US Dollar and the Euro with increasing amazement. The director of the Bank of Israel finally announced a massive program to buy dollars continuously and save the falling dollar from obilivion. 
Tenants must be apologetically told that the rent is now tied to the Shekel, and customers must be told the rate in Shkalim.
It will take some time to get used to this psychic and economic shock. 
Ami Isseroff    

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