The Soviet Gold Standard

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fakename Posted: Sun, Aug 26 2012 1:38 PM

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From 1917-1920, the supply of money increased 25 times. This led to hyperinflation and so one of the most significant reforms of the NEP was the advent of the gold ruble. It was a reform that apparently provided the solution to the currency crisis.

http://en.wikipedia.org/wiki/Hyperinflation_in_early_Soviet_Russia

Throughout the history of the Soviet Union, with the exception of the 30s, the ruble continued to be more valuable than the US dollar.

http://en.wikipedia.org/wiki/Soviet_ruble#Fifth_Soviet_ruble.2C_1947_-_1961

Although contrary interpretations are possible, I think this data illustrates how even strong communists had to conform to economic reality and that no system, even central planning, is immune from the devastating effects of inflation.

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Bogart replied on Mon, Aug 27 2012 9:22 AM

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Too bad the Soviets did not learn or understand that no system is immune from the "Calculation Problem" in all the other areas of life. 

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Marko replied on Mon, Aug 27 2012 4:24 PM

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Ruble wasn't a floating currency, it's exchange rates were fixed, so I don't know that it was more valuable than the dollar and that it was gaining on it throughout. How many rubles did you need for a dollar on the black market is the question?

Anyway ruble couldn't buy you much, a lot of stuff was rationed or just not avaliable (like good cars), so it's value was clearly limited.

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Aristippus replied on Wed, Aug 29 2012 7:08 AM

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I suspect that those at the top knew what would happen eventually, and that the inflation would help them to consolidate their hold on the country: firstly by giving them newly created money to spend, secondly by destroying the savings of the middle-class.